Nippon Active Value Fund, a closed-end investment company affiliated with activist Dalton Investments, intends to launch with a public placement on Wednesday, aiming to raise up to 200 million pounds in London’s first initial public offering (IPO) of the year. The new fund will pursue campaigns at Japanese companies it considers undervalued and will be led by James Rosenwald, co-founder and managing partner of Dalton.
Nippon will be managed by Rising Sun Management, a company controlled by Rosenwald, and has already received a binding commitment of 25 million pounds from Dalton. The California-based hedge fund manages about $3.2 billion, which it deploys across the globe, with a particular focus on Asian and emerging markets. Dalton also pledged an additional 25 million pounds, pooled from its clients, which it would use to participate in the fund’s IPO. The placement ends on January 28, according to a Tuesday announcement.
“This is a great opportunity to take advantage of the recent corporate governance rule changes in Japan and we believe that the company will offer investors attractive levels of capital growth from an actively managed portfolio of quoted Japanese investments,” Rosenwald said in a prepared statement. “Given the significant cornerstone investment already committed and strong investor feedback received so far we are confident of a successful launch.”
Corporate governance and Japan expert Alicia Ogawa will serve as a non-executive director of the fund, according to its website. Ogawa has vast experience in the Asian markets and serves as a director of the Project on Japanese Corporate Governance and Stewardship at Columbia Business School. She is also a director at Tokyo-based Misaki Capital.
The new fund will be “utilising the increased focus on good corporate governance to engage with management teams and unlock value and encourage investee companies to make returns to their shareholders,” the announcement noted. Specifically, the fund will aim at firms with excess capital, seeking to convince them to restructure their balance sheets and improve returns for shareholders.
Nippon will not shy away from launching public campaigns, historically a rare approach in Japan that has been growing in popularity over the past few years, especially since regulators enacted a stewardship code in 2014 and updated it in 2018.