3D Investment Partners Pte, the activist fund that drove change at Toshiba targets the $2 billion Japanese firm

3D Investment Partners Pte, the money manager that drove change at Toshiba Corp., is targeting another Japanese company with a proxy fight over the board of directors that will be agreed upon in a shareholder vote on Sunday.

Singapore-based 3D is looking at appointing four outside board members at Fuji Soft Inc., a Tokyo-listed software firm with a market capitalization of about $2 billion. 3D, the largest shareholder with a 21% stake, contends that Fuji Soft’s board has “presided over a long period of inefficient capital allocation and weak performance. “A specific concern is the company’s enormous real estate holdings. It’s the most recent test case for whether shareholders are becoming more influential in the country of over $5 trillion equity market. For a share of the past decade, Japan has worked to overhaul how companies are managed and find stock owners to press management to improve shareholder returns and profitability.

In an indication of how Japanese management players are paying attention more to stakeholders, Fuji Soft has authorized two of the fund’s director nominations, while it also proposed three additional candidates of its own. The firm also unveiled a Corporate Value Enhancement Committee in August and says its objective is to adopt advice and suggestions from stakeholders on how to improve the company’s value.

In an interview, Fuji Soft President Satoyasu Sakashita said, “We found a gap between the way we think and how the capital market participants view things’’.

The company proposes to focus on shareholders’ requests as required, Sakashita said. 3D, which refused to be interviewed for this narrative, rejects two of Fuji Soft’s board candidates and states that since the committee is composed of existing Fuji Soft directors, it will have similar concerns as the existing board and will be ineffective.

Two major proxy advisers, Institutional Shareholder Services Inc., and Glass Lewis & Co. vary in their voting recommendations for the exceptional general meeting.

ISS indicates backing three of 3D’s candidates and two of the company’s, stating 3D has offered a “compelling case that change at the board level is warranted.” Glass Lewis urges shareholders to vote for all of Fuji Soft’s nominations, contending the company is “earnestly considering various reforms.” It states they should reject two of 3D’s candidates.

3D’s second proxy fight at Fuji Soft

This is 3D’s second proxy fight at Fuji Soft. The fund failed in March to have two director candidates – including its founder and chief Kanya Hasegawa – appointed to the company’s board. But at that time, it only held marginally more than 9% of Fuji Soft’s shares. Now, it owns over double that percentage.

Fuji Soft’s shares have soared more than 170% from a recent low in March 2020, but they still trade more than 40% below their highest in 1999.

About 3D Investment Partners

3D Investment Partners was founded by Hasegawa in 2015, and he is the Chief Executive Officer and Chief Investment Officer of 3D Investment Partners.

Earlier to founding 3D Investment Partners, he was a Partner and Managing Director at Broad Peak, a Singapore-based multi-strategy fund.

Earlier, Mr. Hasegawa was at Tudor Investment Corp and was investing in distressed debt and real estate at the Merchant Banking Group and Special Situations Group for Goldman Sachs in their Tokyo and London offices.

The value-focused investment fund is one of Toshiba’s largest shareholders and has pushed the conglomerate on its strategy after years of upheavals. 3D also recently sent a letter to beverage maker Sapporo Holdings Ltd., requesting its outside directors to focus on “prolonged underperformance.”