January 19, 2018 / 5:45 AM / a month ago

UPDATE 1-HK activist Oasis calls on GMO Internet to strengthen governance

* Oasis Management makes 6 proposals for GMO Internet’s AGM

* Calls for less CEO power, abolishing anti-takeover defence

* Oasis holds 5 pct of GMO Internet’s shares (Updates with market reaction, comments from GMO)

By Hideyuki Sano

TOKYO, Jan 19 (Reuters) - Hong Kong-based investor Oasis Management Company has proposed that Japanese internet and cryptocurrency firm GMO Internet reduce the power of its founder and abolish its takeover defences.

The hedge fund said on Friday it had put forward six motions to be discussed at GMO Internet’s annual general meeting, which is scheduled to take place in late March, in a growing sign shareholder activism may be starting to take root in Japan.

Japanese Prime Minister Shinzo Abe has made corporate governance reform one of the pillars of his efforts to reinvigorate the country’s economy.

The company’s share price rose 4 percent on Friday on speculation the proposal from Oasis would help boost GMO’s profitability. So far this year, GMO Internet shares have been hit by a plunge in bitcoin.

Noting that GMO Internet’s market value of 226 billion yen ($2 billion) falls short of the total of its eight listed subsidiaries at 292 billion yen ($2.6 billion), Oasis said it should be able to boost its value through better management.

“We think the firm has a unique business model, being a rare Japanese internet firm with B2B focus, and has further room to grow,” said Takuya Shigaki, an analyst at Oasis. “But it has been valued cheaply in the market because of governance.”

GMO Internet has an extensive range of businesses, with decision-making concentrated in its founder and CEO Masatoshi Kumagai, who owns more than 40 percent of the firm’s shares, Oasis said.

The fund is calling for the setting up of a nominations committee as well as the separation of the roles of president and chairperson, on the grounds that the firm needs a stronger board.

Oasis also proposed the firm abolish its anti-takeover measures that do not need approval at a shareholder meeting.

Harumi Ishii, spokeswoman for GMO Internet, said the company had no immediate comment.

Oasis has been a shareholder in GMO Internet for more than six months and now holds more than five percent of its shares. The share price rose 28 percent last year, outperforming a 19.7 percent rise in the overall Japanese share market.

$1 = 111.20 yen Reporting by Hideyuki Sano; Editing by Alexander Smith and Sam Holmes

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