TOKYO (Reuters) -Hong Kong-based activist investor Oasis Management on Monday revealed it owns over 3% of Japan’s Kao, days after claiming the cosmetics and skincare firm could boost its share price by 76% by streamlining and focusing on overseas marketing.
Oasis has been investing in Kao for over four years and engaging with it for nine months, the fund’s founder and chief investment officer, Seth Fischer, told a Tokyo press conference.
The fund has full shareholder rights and is considering options to encourage management to adopt its recommendations, including submitting shareholder proposals, he said.
Kao declined to comment on the briefing.
Shareholder activism is on the rise in Japan as regulators have backed calls from investors at home and abroad for improved corporate governance, and as resistance to activists – long regarded in Japan as asset-strippers – wanes.
Kao is the world’s second-largest cosmetics and sixth-largest personal care product firm by revenue, LSEG data showed. Sales in both areas have yet to return to pre-pandemic levels, unlike at rivals Unicharm and Beiersdorf, Fischer said.
Oasis in a presentation on Thursday called on the owner of Japanese skincare brand Biore and luxury British cosmetics label Molton Brown to recover market share by prioritising marketing overseas and streamlining its “bloated brand portfolio.”
It said Kao’s stock price had fallen more than 20% since the start of 2021 but that adopting its proposals could see it exceed 10,000 yen ($65.87). The price has since risen more than 6% to above 6,200 yen, and was up 0.2% in Monday trade.
Kao on Thursday said Oasis lacked sufficient understanding of its portfolio management and restructuring plans. It said it planned to engage with Oasis and welcomed new perspectives.
On Monday, Fischer said Kao has no board members with international marketing experience and called for the appointment of a chief marketing officer. He also called for more diversity on the board, saying the cosmetics maker had only one female board member versus two a year ago.
Fischer said he asked to meet Kao President Yoshihiro Hasebe several times, and that Oasis published its concerns as it was not satisfied with Kao’s response to private engagement.
“Their existing brands have such growth potential,” Fischer said. “They have the right products, they simply need to focus on marketing.”
($1 = 151.8200 yen)
(Reporting by Anton Bridge and Makiko Yamazaki; Editing by Tom Hogue and Christopher Cushing)
