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Steel Partners cuts investment in Japanese firms.

TOKYO, Sept. 13 Kyodo

U.S. hedge fund Steel Partners has recently reduced its equity stakes in 10 of 11 Japanese firms it has invested in compared with the beginning of this year, reports it submitted to the Kanto Local Finance Bureau showed Saturday.

Steel Partners Japan Strategic Fund (Offshore) L.P., the Japan unit of the hedge fund, had reduced the ownership ratios in the 10 companies, including watch maker Citizen Holdings Co. and Nissin Food Products Co., by the end of August, compared with January, the reports said.

The only exception is wig maker Aderans Holdings Co. in which the hedge fund increased its stake during the eight-month period.

Steel Partners, which has been known as a vocal shareholder, has unloaded portions of its shareholdings in these Japanese firms apparently due to cancellations of contracts by its client investors in view of worse-than-expected investment performance, analysts say.

Tatsuya Furukawa, chief consultant at Japan Investor Relations and Investor Support Inc., also said foreign hedge funds are being forced to reduce their investments in Japan because many U.S. and European investment banks -- hedge funds' key financiers -- have incurred losses in their home markets and have thus unwound investment elsewhere.

Other investment funds have also lowered their stakes in Japanese firms, they said.

Dalton Investment K.K., the Japan unit of U.S. investment fund Dalton Investments LLC which made headlines last year by waging a proxy fight against elevator maker Fujitec Co. to oppose its adoption of antitakeover measures, reduced shares in five Japanese firms, while increasing equity in two firms.

Brandes Investment Partners L.P., the Japan unit of another U.S. investment firm, which once called on Ono Pharmaceutical Co. to raise its dividends, also unloaded shares in Japanese firms.

Steel Partners' investment activities in Japan have stalled with talks to increase its equity holding in beer brewer Sapporo Holdings Ltd. becoming bogged down, though the hedge fund recently proposed a takeover bid for Noritz Corp.

Large-lot investors owing more than 5 percent of outstanding shares are required to submit reports to local finance bureaus. Such investors also need to report when their ownership ratio changes by 1 percentage point or more.
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Publication:Japan Weekly Monitor
Date:Sep 15, 2008
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