Japan’s top venture capital firm yields to activist for massive buybacks

By Makiko Yamazaki

TOKYO (Reuters) – Japan’s top venture capital firm JAFCO Group Co Ltd said on Friday it would buy back shares worth 42 billion yen ($301 million) through a tender offer, yielding to demands from a group of shareholders backed by a prominent activist investor.

The tender offer, worth about a quarter of JAFCO’s current market value, would allow the investor group led by Yoshiaki Murakami to exit their investments, JAFCO said, adding that the group has agreed to sell all of their 19.53% stake.

The activist group had suggested that there was a possibility of increasing their stake to 51%, and the prospect of their larger ownership has caused some investors to refrain from investing in JAFCO’s funds, the company said.

JAFCO also said it would sell all of its 3.9% stake in Nomura Holdings (NYSE:)’ listed research affiliate Nomura Research Institute Ltd (NRI) to finance the buybacks.

The company’s NRI shareholdings are worth about 80 billion yen ($574.67 million) at Thursday’s closing price of 3,370 yen and after-tax sales proceeds would be about 52 billion yen, it said. Nomura, Japan’s largest investment bank, was a major investor in JAFCO when it was founded in 1973.

The latest plan was mostly in line with demands from the activist investor group, which had called for buybacks worth 50 billion yen using proceeds from NRI share sales.

The group’s main fund, which is called City Index Eleventh, could not be reached immediately for comment.

JAFCO also said it aims to improve capital efficiency and to boost the ratio of return on equity (ROE) from the current 6% to around 15% within five to six years.

($1 = 139.2100 yen)

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