LONDON - Asset Value Investors Limited (AVI) has publicly urged Rohto Pharmaceutical (TADAWUL:2070) Co., Ltd. (TSE: 4527), a company within the AVI Japan Opportunity (SO:FTCE11B) Trust (AJOT) portfolio, to concentrate on its core skincare and eye drops businesses. The investment firm seeks to redirect Rohto's focus away from its regenerative medicine venture, which AVI considers unsuccessful and detrimental to shareholder value.
Since June 2024, AVI has been in dialogue with Rohto, advocating for a business strategy that prioritizes profitable sectors and is conscious of capital costs and stock prices, in line with the Tokyo Stock Exchange's guidelines. Despite these efforts, AVI's attempts to constructively engage with Rohto's board have been largely unmet, with limited access to board members and continued investment decisions by Rohto that AVI views as counterproductive.
Rohto has recently been involved in high-valuation M&A deals and issued convertible bonds that could dilute shareholder value, actions that have coincided with a stagnant share price. Joe Bauernfreund, CIO and CEO of AVI, expressed disappointment in the lack of successful engagement with Rohto's board and has now taken the campaign public to encourage the company to improve its corporate value.
Kazunari Sakai, Head of Research at AVI Japan, emphasized the significant potential of Rohto's cosmetics and eye care sectors. He criticized the company's continued investment in regenerative medicine, which he believes is impeding the realization of Rohto's intrinsic value. AVI is confident that a strategic shift and clearer communication with investors could unlock Rohto's full valuation potential.
AVI, established in 1985, has a long-standing presence in the Japanese equity market, managing investments through AVI Global Trust and AJOT, among other funds. The firm collectively invests approximately ¥120 billion (£1.8 billion) in the Japanese market. This public campaign represents AVI's latest effort to influence positive change in the management strategies of its investment targets to enhance shareholder value.
The information in this article is based on a press release statement from AVI.
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