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Ex Goldman Partner launches Japan activist fund

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Gordian Capital has launched the Japan Catalyst Fund sub-advised by Tokyo based, Japan Catalyst, Inc, a 100 per cent subsidiary of listed Monex Group (TSE 8698).

Japan Catalyst invests in listed Japanese equities, seeking to generate outsized investment returns by leading the transformation of Japanese companies using a constructive approach in engagement with the senior management of these firms. The launch of the Cayman domiciled fund follows the successful launch in April 2020 of a domestic fund, the Monex Activist Mother Fund, which has generated, since inception, a net return of +43.2 per cent (end July 2021) and an excess return of 10.6 per cent compared to the TOPIX over the same period.

Japan Catalyst believes that Japan engagement can only produce positive, timely and effective results through direct and intensive dialogue with top management, engaging directly with senior management, not indirectly or through introductions or intermediaries. With its sub advisory team consisting of 9 Japan based, experienced professionals with a deep knowledge of the Japanese corporate sector, regulatory environment and culture, and with extensive networks of senior Japanese management, built over the last 3 decades, the Fund is well positioned to take advantage of a myriad of investment opportunities.

Oki Matsumoto is CIO, Chairman of Japan Catalyst, Inc, and Monex Group CEO. He began his career at Salomon Brothers in Tokyo as a trader, before joining Goldman Sachs Japan, becoming the Partner in charge of trading, risk management, capital markets and special situations. A former outside director of the Tokyo Stock Exchange, he is a member of multiple public councils related to corporate governance and capital market reforms in Japan and has built an unparalleled network amongst Japanese corporate leaders.

Taro Hirano President/Chief Portfolio Manager has over 20 years of investment experience including 16 years as a value investor at AllianceBernstein Japan. Earlier in his career he worked at McKinsey & Co for five years, bringing a rare combination of asset management and business consultancy expertise.

Emi Onozuka, COO, held several roles during her 20 years in Goldman Sachs Asset Management Japan where since 2016, she headed the Stewardship Responsibility Group, leading research in ESG and conducted company research and engagements with investee companies. Emi is also currently the Chair of the Steering Committee for Japan Stewardship Initiative (JSI) for which the Japan Exchange Group act as secretariat and the Japan Financial Services Agency, the International Corporate Governance Network and Japan Business Association (known as “Keidanren”) sit as observers.

Matsumoto says: “Our edge is firstly, our access to key personnel including top corporate management and board members as well as senior officials in the Japanese government, secondly: our constructive approach to engagement based on long term corporate value creation including ESG and a constructive dialogue based on trust with corporate management and thirdly; working in a true partnership with the companies in the Fund’s portfolio. We believe the ideal form of engagement investment is offering an outside hand to support the management and companies when they are trying to change rather than taking an aggressive stance and forcing change for changes sake, where the counterparty is neither ready nor willing to change. Given our access to key stakeholder early in the engagement process, we can get a sense of their receptiveness to engage and willingness to transform.”

Hirano says: “Corporate governance reform in Japan since 2013 has been significant but it is still incomplete. We will be part of the catalyst in realising further reforms and help increase corporate value, realise higher equity returns, and stimulate Japanese capital markets by supporting Japanese corporate management and accelerating change. The Fund is a high conviction, highly concentrated portfolio that takes a holistic engagement approach working with government, media and industry groups.”

Emi Onozuka remarked “ESG can be a powerful engagement topic to create long-term based corporate value, and we focus on ESG themes that align with our investment philosophy and investment time horizon. A portion of our firm’s profit is given back to the local community to further stimulate improved corporate governance and transformation in Japan.”

A recent successful case of engagement for JCI’s domestic fund was due to direct and repeated dialogue with the CEO (where Oki had rapport through a long-standing relationship) of JAFCO (8595) and the JAFCO board by the Japan Catalyst team. JAFCO announced the sale of NRI and a positive approach to future shareholder returns including share buybacks.

As part of the Fund’s launch, Japan Catalyst will be leveraging Gordian Capital’s 16 years of expertise to provide operational, regulatory, and compliance support for the Fund, acting as the Manager.

Established in 2004 by capital markets professionals and alternatives industry veterans active in Asia since the 1980s, Gordian Capital is Asia’s leading institutional quality, independent fund platform specialist, currently managing USD6.2 billion. Initially launching its first operating subsidiary in Singapore in 2005, the group now has a regulated presence in Singapore, Japan and Australia and its Singapore and Tokyo operations are both registered with the US SEC as Registered Investment Advisers.

“We are pleased to be working with Matsumoto san and his team and look forward to supporting both them and the fund’s growth,” says Mark Voumard, CEO of Gordian Capital Singapore Pte. Ltd. “They bring a wealth of experience and unparalleled networks within Japan, combined with the right approach to activism for that market and seek to implement significant, measurable, positive change.”

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