Elliott takes 'significant' stake in Japan shipper Mitsui OSK
The logo of Mitsui O.S.K. Lines is seen at the company's headquarters in Tokyo, Japan September 11, 2020. REUTERS/Kim Kyung-Hoon
TOKYO, March 18 : Elliott Investment Management has taken a "significant" stake in Mitsui OSK Lines, with two sources saying it is pushing the Japanese shipping company to improve shareholder returns and capital efficiency.
Mitsui OSK's shares extended gains and were up around 12 per cent after Reuters reported the investment, which Elliott later confirmed in a statement.
The hedge fund is at the forefront of growing activist activity in Japan which is pushing companies to accelerate governance reforms and reshape portfolios.
Elliott believes Mitsui OSK should conduct a review of its real estate portfolio and consider relisting subsidiary Daibiru, the sources familiar with the matter also said.
In 2022 Mitsui OSK made Daibiru, whose assets include commercial property in central Tokyo, a wholly owned subsidiary and delisted the company.
Reuters could not immediately determine the size of the stake. Mitsui OSK declined to comment on discussions with investors. The sources declined to be named as the information is not public.
Elliott in a statement said "the market materially undervalues the business." It aims to work with the company to ensure its upcoming management plan "is appropriately ambitious."
Mitsui OSK has a fleet of more than 900 vessels, including bulk carriers, tankers and ferries. Its peers include Nippon Yusen and Kawasaki Kisen.
It has said it aims to gradually improve its price-to-book ratio, a key valuation metric, to 1 and more over time from 0.67 times at the end of last March.
The Tokyo bourse has put pressure on companies trading below book value to improve their use of capital.
Mitsui OSK has emphasised both the importance of shareholder returns and the need for growth investment. The shipping industry is cyclical and the company aims to grow the proportion of stable revenue.
The shipping company will announce its latest management plan at the end of this month.
Elliott has a growing presence in Japan and scored a landmark win this month after forcing Toyota to ​sweeten its bid for Toyota Industries.
The hedge fund, which has built a reputation as a relentless activist, has invested in companies including Tokyo Gas and Sumitomo Realty & Development.
Elliott target Kansai Electric Power is considering selling shares of construction firm Kinden, Reuters reported last week.
Shipping firms are grappling with the fallout from the Iran war. A Mitsui OSK-owned container ship sustained minor damage while at anchor in the Gulf last week.
