A Japanese fund has scored a major victory by securing board positions at clothing company Daidoh, a sign that activist investors are gaining influence in the country.
Shareholders of Tokyo-based Daidoh backed three of six board candidates put forward by Japanese activist fund Strategic Capital, while rejecting one from Daidoh, the company said in a statement on Thursday. The fund is the largest shareholder with a 29% stake, according to data.
Although they failed to win a majority of the loss-making company’s board, the results mark a marked change in a country where activist proposals have rarely been adopted. Just a day earlier, the president of a small brokerage firm, Toyo Securities, was forced to withdraw his candidacy for re-election to the board due to a lack of shareholder support.
The Tokyo Stock Exchange’s push for companies to focus more on shareholders has emboldened activists and prompted Japanese asset managers to open up more to their side, helping to propel the country’s stock market to multi-decade highs on expectations of improving returns.
Shares of Daidoh, which sells brands including Brooks Brothers in Japan, rose 7.8% in volatile trading on Thursday as the market digested results from its annual general meeting. The stock has more than tripled since Strategic Capital took a stake in the company in November 2022, far outpacing the 38% gain in the Topix index.
Tsuyoshi Maruki, president of Strategic Capital, called the results groundbreaking, even as he acknowledged the difficulty of securing a majority on the board.
“The era of automatically approving company proposals is coming to an end,” he said at a briefing in Tokyo, adding that the company will continue to try to rebuild the company’s apparel and real estate businesses.
