British Fund Calls on Government Not to Block Investment in J-Power

By Kyodo News International, Tokyo

May 12–TOKYO — The Children’s Investment Fund on Monday urged the government not to prevent the British hedge fund from acquiring additional shares in Electric Power Development Co., Japan’s largest power wholesaler, under the pretext of energy security concerns.

The fund released a statement prior to a widely expected government issuance of an administrative order by Wednesday, which will require the fund to drop its attempt to raise its current stake of 9.9 percent in the company, commonly known as J-Power, to up to 20 percent.

“It is discriminatory to block investors looking to improve the broken corporate governance of J-Power such as entrenched business and cross-shareholdings,” John Ho, who heads the fund’s Asian operations, said in the statement.

He said the Ministry of Economy, Trade and Industry “should not be choosing shareholders thereby encouraging poor governance practices for publicly listed companies.” Until now, Japan has never issued an administrative order based on the Foreign Exchange and Foreign Trade Law to stop an overseas investor from acquiring a larger stake in a listed company.

Under the law, foreign investors seeking to obtain a stake of 10 percent or more in firms deemed critical to national security and the maintenance of public order, including utilities and arms makers, are required to gain government approval in advance.

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Copyright (c) 2008, Kyodo News International, Tokyo

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