Japanese equity trust falls short of IPO target

Shareholder activist aims to take advantage of changes under Abenomics

A Japanese investment trust seeking activist opportunities under Abenomic corporate governance changes has fallen short of its launch target.

The AVI Japan Opportunity Trust raised £80m ahead of its admission to the London Stock Exchange on Monday.

It is focused on exploiting shareholder friendly measures brought as part of prime minister Shinzo Abe’s economic reforms. The portfolio will consist of 20 to 30 small-to-mid cap companies.

The investment trust had been targeting £100m to £200m. The Asset Value Investors team has placed more than £1m in the trust.

The annual management fee will be 1% on the lower of market cap or net assets with a quarter of management fees to be reinvested in trust shares. Investors will have the option to exit at net asset value in four years.

‘Extraordinarily cheap Japanese companies’

Joe Bauernfreund (pictured), fund manager, said he is pleased that AVI will be able to continue its activism in Japan via a dedicated fund. The British Empire Trust, which Bauernfreund also manages, currently has a 19% allocation to the country.

“This will be a portfolio of some of the extraordinarily cheap smaller companies in Japan at a time when an improving corporate governance regime is forcing change. We will have the right to make shareholder resolutions at annual general meetings, which are becoming more common with a record number this year.”

The closed-ended fund structure facilitates AVI’s activist approach as shareholder resolutions in Japan must be made by investors who have held shares for at least six months. This would be problematic in an open-ended fund that is managing inflows and outflows.

In particular, the investment trust will be pushing companies to use excess cash for dividends, share buybacks or M&A.

Bauernfreund will be supported on the investment trust by Tom Treanor and Daniel Lee.

Tags: | |

Related Content

Leave a Reply