Gov't asks British fund to drop plan to raise stake in J-Power

Wednesday 16th April, 01:54 PM JST

TOKYO —

The government asked The Children’s Investment Fund, a British hedge fund, on Wednesday to drop its plan to acquire a larger stake in Electric Power Development Co, citing energy security concerns. It is the first time Japan has rejected a plan by an overseas investor to seek a larger stake in a company the government deems vital to national security or the maintenance of public order under the Foreign Exchange and Foreign Trade Law.

‘‘Today is a sad day for Japan,’’ John Ho, head of the fund’s Asian operations, said at a news conference at the Ministry of Economy, Trade and Industry. ‘‘The government recommendation will have profound negative implications for the Japanese energy sector, economy and citizens.’’ TCI, already the largest shareholder in J-Power, with a 9.9% stake, has indicated it will take legal action in the event its stock purchase plan is rebuffed. On Jan 15, TCI applied for government approval to raise its stake to up to 20% in J-Power.

J-Power is Japan’s leading power wholesaler, supplying electricity to all 10 major domestic utilities through its nationwide transmission networks.

Top government spokesman Nobutaka Machimura stressed that the matter relates directly to national security. ‘‘This case is straightforwardly related to a country’s security,’’ the chief cabinet secretary said, adding that Japan has investment rules in line with international standards.

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7 Comments

MPLS2 at 07:57 PM JST - 16th April

Hedge funds are by definition there to make a quick buck(yen), pure hypocrisy to say it is a sad day for Japan, more like ssd day for the fund..
kenchan at 09:51 PM JST - 16th April

MPLS2> I'm not a fan of hedge funds, BUT they are right that this is a sad day for the japanese economy. Such an intervention has nothing to do with national security as the fund is just looking to improve margins at a bloated inefficient organisation that has been molly coddled by METI and operates at the expense of Japanese electricity consumers. They are looking to increase their stake to put more pressure for a change of management, which is the key to improving J-Power.

By refusing this move by the TCI, METI are fundamentally stopping the necessary changes needed in such bloated Japanese companies and thus will only be a detriment to the economy as a whole.

To sum up, yes TCI want to make a quick(debatable what the timescales are here) buck but if they do it by improving the operations of J-Power then isn't that a good thing?
MPLS2 at 10:40 PM JST - 16th April

Yes, I agree with your comments but the key phrase is " in line with international standards". If that is the case then legally, TCI don't have much of a leg to stand on..
some14some at 10:46 PM JST - 16th April

It proves that J-power is infact too fragile!
medievaltimes at 12:33 AM JST - 17th April

Interesting points. Im not an expert in this area so help me out if I misunderstood:

Dont hedge funds buy/sell publicly traded companies??? Regardless of the actual value of the company the people decide what the value of the company is reflected by supply/demand of the stock which in turn gives the stock its price right??? These are supposed to be the basics of a free and open market right???

Seems to me that if a company's interests were so sensitive to national security it would be a bad idea to allow any and all investors access to it due to conflict of interests.

Seems to me Japan has no right to protest it. Again, not an expert so feedback is wanted/welcomed.
MPLS2 at 01:38 AM JST - 17th April

They allow investors but i think they are currently limited at 10% if they are foreign. These kind of rules are common in USA e.g just like when Hutchison tried to buy some ports and they were looked into by the US authorities..
kenchan at 07:50 AM JST - 17th April

These kind of rules are common in USA

common doesn't make it right and those "in line with international investment standards" are rubbish..there is no such thing as it depends on each country's biase towards protecting national status symbols. He just refers to US and French policies on inward investment. There is no argument for his position apart from blind nationalistic protectionism.