They may still be the best-named activist hedge fund in history, but London-based The Children’s Investment Fund hasn’t made any gains in its battle against Japan Tobacco. Or has it?
According to Bloomberg, on paper, TCI has never won a proxy fight, has received nothing but rebukes, and has essentially never gotten a past go in its battle with the former government monopoly. Behind the scenes however, things are telling a much different story.
TCI’s criticisms, such as the tobacco juggernaut’s low dividend payout, its failure to do share buybacks, and its running of non-core, non-tobacco businesses, have actually been addressed by the company – albeit under much different circumstances.
Earlier this year, the tobacco giant surprised investors by announcing that they would be selling their beverage operations, and in the same month, it also announced that it would be buying back over $800 million worth of its shares, short of the $1.2 billion TCI was hoping for but good enough nonetheless. Meanwhile, it has also lifted its dividend payout ratio to 50.1%.
Naturally, the Japanese company denies that all of it was done due to pressure from TCI, and has even cited different drivers behind the moves, but Oscar Veldhuijzen, a partner at the activist fund, couldn’t be happier:
“Our game was not necessarily to win the AGM proposals, but to move them, put pressure on them. This has been a great success for us.”
With Japanese companies continuing to open themselves up to the outside world, TCI’s success – along with those of its fellow activist funds in the region – may just herald a new dawn for corporate Japan as it slowly brings itself into the more competitive, shareholder-centric 21st century.
Photo credit: Moyan Brenn via Flickr