(Bloomberg) — Mizuho Financial Group Inc.’s trust unit is seeking to double its team of shareholder relations specialists in Japan as its corporate clients scramble to address growing investor activism.
“We have been actively expanding our team in the last year and a half,” said Kei Umeda, chief executive officer of Mizuho Trust & Banking Co. in an interview, referring to those who advise companies on how best to engage with shareholders.
The firm has a team of 15 staff specialized in shareholder relations services, many of whom have been hired from rivals. “Ideally, we would want to double that,” he said, while acknowledging it’s very difficult to secure experienced talent in this niche field. Umeda’s operation also covers custody for pension funds to real estate brokerage and asset management.
Japan’s third-largest bank is seeing a three to fourfold increase in the number of inquiries from publicly listed companies compared with the previous fiscal year, as they seek help for strategic planning of their shareholder relations. In the six months through September, Mizuho got nearly 100 inquiries a month, he said.
Until a few years ago, annual shareholder meetings in Japan had often been largely ceremonial due partly to the practice of cross shareholdings that ensure large voting blocks are in friendly hands.
But banks and others have been rapidly unwinding these relationships amid closer public scrutiny over corporate governance, with sustainability and other social issues increasingly changing institutional investors’ voting behavior.
In Japan’s peak shareholders meeting season in June this year, a record 97 companies had shareholder proposals, according to data from the Daiwa Institute of Research Ltd. They included Silchester International Investors’ proposal to Bank of Kyoto Ltd. and three other regional banks to change their dividend policies.
Among the most high-profile cases is the push to take Toshiba Corp. private, with shareholders of the industrial giant earlier this year electing representatives of two hedge funds to the board. This month, brewer Sapporo Holdings Ltd. joined the list of Japanese companies targeted by activist investors.
Umeda said many of his clients have not yet faced any shareholder action and are rather taking measures preemptively to address potential investor demands such as better disclosure.
Further comments from the interview:
- In Mizuho’s real estate brokerage, Umeda said money is flowing into Japan’s resort assets.
- Investors are buying the country’s ski and beach hotels and related businesses in hopes of cashing in on a possible surge in Chinese tourists in the future, he said, adding that the cheaper yen also drives the trend.
- Continues to see strong interest in Japan’s property market from global funds, which have a lot of dry powder to discharge in Asia, though rapid rate hikes in the US have made them a bit cautious. “Major real estate funds were waiting to see the development of the financial conditions before they step on the accelerator,” he said.
–With assistance from Sanjit Das.
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