NISSAN Motor shares jumped the most in 15 years after an activist investor took a 2.5 per cent stake in the embattled Japanese automaker.
Suntera (Cayman), a trustee of ECM Master Fund, was identified as the buyer of the stake in a filing by Nissan. ECM Master Fund was cited in past regulatory filings as being managed by Effissimo Capital Management, a Singapore-based hedge fund that buys into distressed companies.
Effissimo controls the stake, a person with knowledge of the matter said. The fund is best known for taking on Japan’s Toshiba in a landmark moment for corporate accountability in Japan. The conglomerate’s chief executive officer resigned in 2021 after the fund accused company of infringing on shareholders, and Toshiba accepted a buyout offer two years later.
The activist investors’ involvement in Nissan fuelled a rally in the carmaker’s shares amid speculation it may embark on structural reforms to fix its ailing business, said Ikuo Mitsui, a fund manager at Aizawa Securities. The stock had plunged since last week after the troubled carmaker announced plans to slash jobs and cut a fifth of its production capacity.
Nissan said in a statement that the company is “continuously engaging with institutional investors and analysts from securities companies,” while adding that it’s not in a position to identify whether the stake acquisition was indeed made by Effissimo.
Representatives for Effissimo did not respond to an email seeking comment.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Effissimo has held shares in another company called Nissan Shatai, which runs Nissan’s manufacturing operations, since at least 2007. The fund is Nissan Shatai’s second-largest shareholder, according to a September filing.
Effissimo has also bought into UACJ and Sanken Electric, and owns stakes in companies including Dai-ichi Life Holdings and Fudo Tetra.
Activist campaigns aimed at shaking up a company’s operations and increasing shareholder value have become increasingly common in Japan over the past decade. Elliott Investment Management built sizable stakes in Sumitomo and SoftBank Group, while Oasis Capital earlier this year called for a governance overhaul at Japanese drugstore chain Ain Holdings Inc.
Effissimo was founded by disciples of Yoshiaki Murakami, the father of activist investing in Japan. The fund became Toshiba’s top shareholder in 2017 when the company was reeling from a massive writedown on its nuclear power business. Toshiba later split into three separate companies as part of efforts to improve shareholder value.
Nissan’s shares climbed as much as 21 per cent on Tuesday (Nov 12) before closing up 13 per cent. The company’s short interest stood at 21 per cent of its free float as of Friday, making it the third-most shorted stock on the Nikkei 225 Stock Average, according to data from S&P Global.
Nissan said last week that it now sees its operating income plunging to just 150 billion yen (S$1.3 billion) in the fiscal year ending in March, down 70 per cent from its previous forecast. The management also lowered its revenue outlook by more than 9 per cent, meaning it now expects virtually no growth for the year.
Chief executive officer Makoto Uchida told investors that Nissan has been affected “not only by external challenges, but also by our specific issues,” alluding both to the breakneck rise of Chinese automakers and Nissan setting overly ambitious sales targets.
Nissan is now expecting to produce about 3.2 million vehicles in the year ending in March, almost 7 per cent fewer than the last fiscal year. The company also lowered its retail sales outlook to 3.4 million vehicles, paring forecasts for each of its major markets: North America, China, Japan and Europe. BLOOMBERG
