Effissimo Capital is now Toshiba's biggest investor

The purchase of Toshiba shares by Effissimo - which is closely watched in Japan because of its links to the country's most famous activist investor Yoshiaki Murakami - is worth about 65 billion yen (S$818 million), according to a regulatory filing ye
The purchase of Toshiba shares by Effissimo - which is closely watched in Japan because of its links to the country's most famous activist investor Yoshiaki Murakami - is worth about 65 billion yen (S$818 million), according to a regulatory filing yesterday.PHOTO: AGENCE FRANCE-PRESSE

Fund's emergence with 8.14% stake comes as tech giant grapples with losses at nuclear unit

TOKYO • Singapore-based fund Effissimo Capital Management, established by former colleagues of Japan's most famous activist investor Yoshiaki Murakami, has become the largest shareholder in Toshiba with an 8.14 per cent stake, a regulatory filing showed yesterday.

Effissimo is closely watched in Japan because of its passing connection with Mr Murakami. The fund is the largest shareholder in shipper Kawasaki Kisen Kaisha, office equipment-maker Ricoh and electronics retailer Yamada Denki.

Effissimo's purchase of Toshiba shares is worth about 65 billion yen (S$818 million), based on its closing price on March 15, the date of ownership shown in the filing.

The activist fund's sudden emergence as the biggest shareholder comes as the electronics conglomerate is trying to survive through the huge losses stemming from its United States nuclear business.

Earlier this month, it missed submitting audited third-quarter earnings for the second time and said it would consider selling a majority stake in its nuclear unit Westinghouse, which is at the centre of its financial troubles.

But yesterday, Toshiba said the board of Westinghouse will decide whether to file for bankruptcy, suggesting that that is one of the options under consideration as it struggles with billions of dollars in liabilities from cost overruns on nuclear construction projects.

"Whether or not Westinghouse files for Chapter 11 is ultimately a decision for its board, and it must take into account the various interests of all of its stakeholders, including Toshiba and its creditors. It is not appropriate for Toshiba to comment prematurely," Toshiba said in an e-mail statement.

The company's shares rose 7.8 per cent in Tokyo trading.

It has been grappling with construction delays at Westinghouse projects. It has estimated that it will need to take a write-down of 712.5 billion yen, though it has not been able to get auditors to sign off on the final figures.

The company said this month that it is re-evaluating Westinghouse's position within the group and it may de-consolidate the nuclear unit by selling a controlling equity stake.

"Westinghouse's bankruptcy is really the only way for Toshiba to limit the risks of further losses in the business," said Morningstar Investment Services analyst Kazunori Ito. "If there is a reason for the shares to be up today, it may be because some believe that the Chapter 11 process is coming along."

Westinghouse also appears to be already assembling a team of lawyers and advisers to help with the restructuring. The company has hired PJT Partners, people with knowledge of the matter have said.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on March 24, 2017, with the headline 'Effissimo Capital is now Toshiba's biggest investor'. Print Edition | Subscribe