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Harvard endowment fund sells Toshiba stake to Singapore investor 3D

Activist shareholders now own over 30% of Japanese group facing takeover proposal

Six of Toshiba's top 10 shareholders are now activist funds. (Photo by Takuya Imai)

TOKYO -- The Harvard University endowment fund, a major Toshiba shareholder, sold its shares in the company in March to a Singapore-based activist investor, according to people familiar with the transaction.

The shares were acquired by 3D Investment Partners, which voted against Toshiba President Nobuaki Kurumatani and other management proposals at the 2020 shareholders meeting.

With this recent purchase, 3D holds a 7.2% stake in the Japanese industrial group, making it the second-largest shareholder, up from the fifth-largest shareholder as of May 2020.

This shift comes as Toshiba's management is set to weigh a proposal led by CVC Capital Partners to take the group private. The plan calls for a tender offer in July.

CVC's takeover attempt needs support from two-thirds of the shareholders. Six of the top 10 Toshiba shareholders are activists, data from QUICK FactSet shows, with these investors together owning more than 30% of the shares.

A shareholding report filed by 3D with the Kanto Local Finance Bureau on April 2 shows that 3D acquired 4.7% of Toshiba's shares off the market on March 29. The seller was not disclosed. According to people familiar with the matter, 3D acquired the Toshiba shares from the Harvard endowment fund.

A spokesperson from the Harvard fund said the it does not comment on specific holdings.

Toshiba's largest shareholder remains Effissimo Capital Management, another Singapore-based fund, which holds a 9.9% stake and has clashed with Toshiba's current management team.

The reappointment of Toshiba President Nobuaki Kurumatani has become the focus of the 2021 annual shareholders meeting. (Photo by Taro Yokosawa)

3D has also been at odds with Toshiba over its capital allocation policies and leadership appointments. At the 2020 shareholders meeting, it voted against Kurumatani.

With opposition from 3D and others, only 57.96% of shareholders supported Kurumatani's appointment. The Harvard fund did not exercise its voting right at the shareholders meeting.

3D later demanded that Toshiba investigate the possibility that some voting rights were not handled properly, although the results of the shareholders meeting remained the same. It was later revealed that Sumitomo Mitsui Trust Bank, which managed the shareholders meeting, mishandled some of the voting rights.

Reuters has reported that Hiromichi Mizuno, a Japanese government adviser at the time, had told the Harvard fund that its vote at the meeting could be subject to a regulatory probe if it opposed the company's management. Toshiba said in February that an internal investigation had found no evidence it was involved in any effort to pressure the Harvard fund over voting at the meeting, Reuters said.

Many activist funds bought Toshiba shares when the Japanese company raised capital in 2017, selling shares for 2,628 yen apiece. CVC is thought to be offering 5,000 yen a share in its takeover bid, more than 90% above the 2017 issue price.

The bid price also exceeds the average purchase price of Toshiba shares at 2,520 yen, or $23, by Effissimo and 3,510 yen by 3D. The information on the average purchase price is based on data from QUICK FactSet.

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