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Shares in Nissan jumped as much as 20 per cent on Tuesday after a fund managed by activist investor Effissimo Capital Management was revealed to have taken a stake in the struggling Japanese automaker.
Singapore-based hedge fund Effissimo is known for its high-profile campaigns against some of the biggest names in corporate Japan including Toshiba and shipping company Kawasaki Kisen.
Expectations of Effissimo building its stake above 5 per cent led to speculators’ covering their short positions built in the carmaker since its poor results last week.
The deterioration in Nissan’s financial performance has spurred market speculation that the company, which is now worth ¥1.54tn ($10bn), could be a takeover target or trigger a wider shake-up in Japan’s automotive industry, according to analysts and brokers.
Japan’s third-largest automaker has been plunged into crisis as it confronts brutal competition from Chinese electric car rivals led by BYD. Its alliance with France’s Renault is fading and Nissan has recently partnered with Honda to survive increasing competition with Chinese rivals. Last week, it announced an emergency turnaround plan.
After slashing its annual profit forecast by 70 per cent to ¥150bn, Nissan vowed to enact several restructuring steps including slashing production capacity by 20 per cent, selling down its stake in Mitsubishi Motors by 10 per cent and cutting chief executive Makoto Uchida’s pay.
Effissimo, a secretive fund run by Japanese managers, is known for its campaign against Toshiba, which culminated in a buyout that privatised the company.
Nissan’s half-year results filing showed that Cayman Islands-based Suntera had bought 2.5 per cent of Nissan’s stock as of the end of September, listing Suntera as the trustee of ECM Master Fund.
A 2021 filing by Sanken Electric, a power electronics manufacturer that has been targeted by activists, said ECM Master Fund was managed by Effissimo.
Effissimo confirmed that its fund has taken a stake in Nissan but declined to comment further.
Nissan said it appreciated “all existing and new shareholders that support and believe in the future potential of Nissan”.
News of Effissimo’s stake in Nissan led to a 9 per cent rally in shares of Nissan Shatai, a car assembly company 50 per cent owned by the carmaker, in which the activist investor has amassed a near 30 per cent stake.
Effissimo has, for 17 years, heaped pressure on Nissan to acquire Shatai, which derives almost 99 per cent of its sales from the automaker. Nissan has resisted efforts, including legal action from Effissimo, to make Shatai a wholly owned subsidiary. Bankers said that Effissimo’s stake-building in Nissan appeared to represent an attempt to mount more direct pressure on the carmaker.
Under Tokyo Stock Exchange requirements, Nissan Shatai has been demoted from the Prime to the Standard section for failing to maintain a 35 per cent free float. It now risked being delisted altogether for failing to meet the 25 per cent free float minimum to remain on the Standard section, said brokers.
