An activist fund has set its sights on a Japanese rail company acquiring a 12 billion stake in the proprietor of Tokyo Disneyland.

18 Oct, 2023

An activist fund has set its sights on a Japanese rail company acquiring a 12 billion stake in the proprietor of Tokyo Disneyland.

Palliser Capital, a UKbased fund, is launching a crusade to unleash trapped commercial value targeting a Japanese rail driver with a substantial stake of nearly 12 billion in the proprietor of Tokyo Disneyland. This move comes at a time when Japanese companies are facing increased pressure to enhance their price book rates and governance.

The focus of the crusade is on large cross effects of shares between groups in Japan and noncore effects that hold the eventuality to release value upon trade. Palliser holds a1.6 stake in Keisei Electric Railway, a road driver in Tokyo which in turn holds a 22 stake in Oriental Land, the ¥8.58 trillion 57 billion listed property group that owns Tokyo Disneyland.

Keisei's stake in Oriental Land is valued at roughly 1.3 billion on its balance due to counting conventions in Japan although its current request value stands close to 12 billion. This value is twice the current request capitalization of the road company itself.

Palliser Capital is championing for the road company to reduce its stake in Oriental Land and reinvest the proceeds in its core business of operating and contemporizing its road. The fund is anticipated to present its crusade for Keisei at a barricade fund activism conference in New York.

Japanese authorities are also pushing for bettered governance norms and increased commercial value. The Japan Exchange Group which controls the Tokyo Stock Exchange plans to establish a name and shame governance to enhance companies' capital effectiveness.

Palliser's donation highlights the deformation caused by counting treatment making proper capital allocation delicate for Keisei's operation. While Palliser has engaged in cooperative conversations with Keisei the rail company has been reluctant to reduce its stake in Oriental Land citing complementarity between the businesses.

John Seagrim a Japan equities broker at CLSA views the Keisei stake in Oriental Land as one of the most significant valuation anomalies in commercial Japan.