News

04/12/2008

The launch of a 'Japanese way' of share owner engagement

Tokio Marine Asset Management (TMAM) and Governance for Owners (GO) announce the launch of a Japan Engagement Consortium (JEC).  The intention is to bring together responsible Japanese and international institutional shareholders on whose behalf the Consortium executives will engage with Japanese companies to improve long term shareholder returns. Initial Consortium members will be TMAM and Railpen Investments of the UK and GO plans to invite more global institutions with significant investments in Japan to join during 2009.

The Consortium will be Japanese-led and engagements will be conducted in a way that is appropriate to the Japanese market.  The Consortium will conduct its engagements in private and in a constructive manner, supporting management of companies to make the changes necessary to enhance long term value.  At any one time, it is expected that the Consortium executives will be engaging with 15 to 20 companies on behalf of the Consortium members.  The types of performance factors on which an engagement might be conducted include financial performance, capital structures, communication and investor relations, and corporate governance. 

Yoichiro Iwama, Chief Executive of TMAM, said “Japanese public companies are facing a changed market environment.  There are opportunities for those which adapt rather than build defences.  We hope that developing a Japanese way of communication between share owners and company boards and management will maximise those opportunities for companies and investors.”

Peter Butler, Chief Executive of GO, said “This is a new approach to responsible share ownership in Japan.  Collective engagement by a group of institutions is advantageous as it pools resources efficiently and enables those investors without in-house expertise on Japanese corporate governance matters to conduct a high quality dialogue with portfolio companies.  Japan is at a turning point and we see that as a positive development for long-term share owners in Japan.”

Railpen's Chief Executive Chris Hitchen said, “At Railpen we actively promote and encourage good corporate governance wherever we invest and we are pleased to be joining a prestigious fund manager such as TMAM as a founder member of this consortium. Japan is an important market for us and as long term investors we have a strong interest in encouraging best practice in corporate governance there. In the last year we have worked with Governance for Owners to organise over 100 face to face meetings with Japanese companies in which we invest and we see the consortium as a logical extension of our efforts to be responsible shareowners.”

The Consortium will be operated by GO Japan KK, in which TMAM has recently acquired a 40% interest and board representation. It will be staffed by investment, governance and engagement specialists with expertise in the Japanese public equity market.  The full time team will be supplemented by an Advisory Board of leading Japanese industrialists and public figures who will provide insights into existing and potential engagements and act as a check and balance over the engagement process. An international user group will co-ordinate input into the Consortium’s activities. It will be chaired by Frank Curtiss, Railpen’s Head of Corporate Governance.

ENDS

Notes to Editors:

Tokio Marine Asset Management (TMAM) was established in 1985 and is a principal subsidiary of Tokio Marine & Nichido Fire Insurance Co., Ltd., the largest non-life insurance company in Japan.  TMAM provides investment management and client services to numerous Japanese public and corporate pensions, as well as other institutional investors and corporate entities.  As of March 31, 2008, TMAM was the 4th largest discretionary investment advisory firm in Japan, in terms of Japanese discretionary pension fund assets under management.

Governance for Owners (GO) is an independent partnership between major financial institutions, shareowners and executives dedicated to adding long-term value for clients by exercising owners’ rights.  There are two main product offerings.  The GO European Focus Fund, which invests in European public companies where value can be added through making use of ownership rights.  The GO Stewardship Services offers intelligent voting and engagement on quoted companies in Europe, the US, Japan, and South East Asia. 

Governance for Owners Japan KK (GO Japan) is GO’s Japanese based subsidiary. It was founded in 2007 and TMAM acquired a 40% stake in November 2008. The company provides stewardship services and corporate governance advice to shareowners in publicly quoted Japanese companies and fund managers with Japanese investments. The new Japanese Engagement Consortium will be an extension of these activities. GO Japan has offices in Tokyo and is led by Resident Executive Director Toshiaki Oguchi who has more than 20 years business experience in Japan, US and UK. He has extensive skills and experience in both corporate governance and institutional relations primarily in corporate planning and product development for Nippon Life and Nissay Asset Management. He is an active member of several corporate governance networking groups and committees in Japan and internationally.

Railpen Investments (Railpen) is a subsidiary of rpmi which oversees assets worth approximately £20 billion on behalf of the Railways Pension Trustee Company Limited, the corporate trustee of various UK railway industry pension funds.  The Trustee Company and Railpen have a long established track record as supporters of good corporate governance in our investee companies and were among the first UK pension funds to publish a corporate governance and voting policy.  Railpen has actively voted all UK stocks since 1992.  Railpen believes that good governance has global application and has selectively extended voting to overseas markets in recent years. The company has published self standing corporate governance policies for the USA, Japan, Australia, Singapore and Hong Kong.  Railpen appointed Governance for Owners (GO) in October 2005 to provide a voting overlay service for 1,200 larger stocks in the UK, Europe and North America and extended the mandate to cover Japan in October 2007.