Its bid for a larger stake in Japan’s largest electric utility is on life support, but The Children’s Investment Fund is taking a new tack in its battle for better returns at the company.
The activist hedge fund has asked Electric Power Development Co.’s auditors whether the company, better known as J-Power, should sue its board over a decline in profit.
TCI, in a letter to J-Power, suggested that the company should seek ¥6 billion (US$57 million) from the 13 board members in compensation, alleging that the board acted against the interests of shareholders in approving price cuts.
J-Power, which has resisted TCI’s demands for better corporate governance, rejected five proposals from the London-based firm last month. Last week, TCI’s bid to double its stake in J-Power to 20% was rejected by the Japanese government.
TCI’s continued activism at J-Power coincides with stern warnings to Japan from global investors. The Asian Corporate Governance Association this week presented a white paper calling for improved shareholder returns and greater transparency at Japanese companies.
The group, which includes the California Public Employees’ Retirement System, the largest public pension fund in the U.S., argues that Japan’s corporate governance regime does not meet international standards, and warns that foreign investors would avoid the country if the situation does not improve.