January 18, 2018 / 4:47 PM / 6 months ago

HK activist Oasis calls on GMO Internet to strengthen governance

* Oasis Management makes 6 proposals for GMO Internet’s AGM

* Calls for less CEO power, abolishing anti-takeover defence

* Oasis holds 5 pct of GMO Internet’s shares

By Hideyuki Sano

TOKYO, Jan 19 (Reuters) - Hong Kong-based activist investor Oasis Management Company has proposed that Japanese internet and cryptocurrency firm GMO Internet reduces the power of its founder and abolishes its takeover defences.

The hedge fund said on Friday it had put forward six motions to be discussed at GMO Internet’s annual general meeting, which is scheduled to take place in late March, in a growing sign shareholder activism may be starting to take root in Japan.

Japanese Prime Minister Shinzo Abe has made corporate governance reform one of the pillars of his efforts to reinvigorate the country’s economy.

Noting that GMO Internet’s market value of 226 billion yen ($2 billion) falls short of the total of its eight listed subsidiaries at 292 billion yen ($2.6 billion), Oasis said it should be able to boost its value through better management.

“We think the firm has a unique business model, being a rare Japanese internet firm with B2B focus, and has further room to grow,” said Takuya Shigaki, an analyst at Oasis. “But it has been valued cheaply in the market because of governance.”

GMO Internet has an extensive range of businesses, with decision-making concentrated in its founder and CEO Masatoshi Kumagai, who owns more than 40 percent of the firm’s shares, Oasis said.

The fund is calling for the setting up of a nominations committee as well as the separation of the roles of president and chairperson, on the grounds that the firm needs a stronger board.

Oasis also proposed the firm abolish its anti-takeover measures that do not need approval at a shareholder meeting.

GMO Internet has said the measures, which allow the board to take some actions against any takeover, are necessary to ensure shareholders will have expert views from the board.

The company has also said it is engaged in constructive dialogue with investors.

Oasis has been a shareholder in GMO Internet for more than six months and now holds more than five percent of its shares. The share price rose 28 percent last year, outperforming a 19.7 percent rise in the overall Japanese share market.

But they have been hit by a plunge in bitcoin this week and closed down 2.2 percent at 1,912 yen, giving up all their gains so far this year. ($1 = 111.20 yen) (Reporting by Hideyuki Sano; editing by Alexander Smith)

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