LONDON - Asset Value Investors Limited (AVI) has publicly urged Rohto Pharmaceutical Co., Ltd. (TSE: 4527), a holding in the AVI Global Trust (AGT) portfolio, to concentrate on its core businesses and improve shareholder engagement. AVI's campaign, announced today, seeks to align Rohto's management strategies with the Tokyo Stock Exchange's (TSE) guidelines for cost of capital and stock price awareness.
Since June 2024, AVI has been actively invested in Rohto and has attempted to engage with the company's management to foster sustainable corporate value enhancement. Despite these efforts, AVI expresses concern over Rohto's continued investment in its non-performing regenerative medicine venture, high-valuation M&A activities, and the issuance of convertible bonds that could dilute value, all contributing to a stagnant share price.
Joe Bauernfreund, CIO and CEO of AVI, emphasizes Rohto's undervaluation compared to its skincare industry peers and highlights the quality and growth potential within Rohto's profitable skincare and eye drops segments. AVI's public campaign aims to prompt the Board of Rohto to refocus on these areas, improve capital efficiency, and enhance investor relations communications.
Kazunari Sakai, Head of Research at AVI Japan, also points out the untapped value in Rohto's cosmetics and eye care businesses. He criticizes the company's investments in regenerative medicine as detrimental to shareholder value and an obstacle to realizing the company's intrinsic worth. Sakai stresses the importance of Rohto's urgent need to cease ignoring the cost of capital and to adopt a more stock price-conscious management approach, as requested by the TSE.
AVI's call for change comes after attempts at private dialogue with Rohto's board have been largely unsuccessful, with only one board member meeting with AVI representatives. This public campaign represents a strategic shift by AVI to influence Rohto's corporate governance practices and strategic direction.
Founded in 1985, AVI is a London-based investment management company with a long history of investing in Japanese equities. AVI manages funds including AGT and AVI Japan Opportunity Trust (AJOT), with combined investments of approximately ¥120 billion (£1.8 billion) in the Japanese market. Both AGT and AJOT are listed on the London Stock Exchange (LON:LSEG)'s main market.
This article is based on a press release statement.
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