So what does Singapore’s Effissimo have planned for Nissan in Japan? Let’s see
Effissimo Capital Management’s investment in Nissan Motor, where it acquired a 2.5 percent stake, has raised speculation about its endgame, particularly after a 13 percent surge in Nissan’s shares on 12 November 2024. The Singapore-based hedge fund has remained silent on its motivations, but two primary theories have emerged.
One possibility is that Effissimo views Nissan’s shares as undervalued. The company is trading at just 0.25 times its book value, the lowest among Japan’s top 500 listed companies, and far below other major automakers globally. This suggests that Effissimo might see the potential for significant capital gains as Nissan’s stock recovers.
Moreover, the second theory revolves around Effissimo’s substantial 30 percent stake in Nissan Shatai, a company that manufactures cars for Nissan. Analysts speculate that Effissimo may be pressuring Nissan to buy out minority shareholders in Nissan Shatai, offering a lucrative payout for the hedge fund.
Effissimo’s track record as a deep-value investor further supports this view, with experts like Masatoshi Kikuchi of Mizuho Securities suggesting that the fund might be betting on a recovery in Nissan’s stock price, similar to its rebound after the 2019-2020 restructuring.
In addition to its stake in Nissan, Effissimo also has significant cash reserves after exiting its investment in Toshiba, where it achieved a major corporate governance victory in 2021. This victory, which led to the ousting of Toshiba’s chairman, may give Effissimo the resources and motivation to pursue further activist investments, with Nissan seen as a potential target.
On top of that, Effissimo has held a stake in Nissan Shatai since at least 2007, and the company’s “parent-child” listing, where Nissan holds a majority stake, has drawn criticism for potential conflicts of interest and poor financial performance.
The controversy surrounding this setup is echoed by Strategic Capital, another activist investor in Nissan Shatai, which argues that Nissan has exploited the subsidiary’s profits. Effissimo supported Strategic Capital’s proposal for a committee to protect minority shareholders at Nissan Shatai’s annual meeting, securing significant backing for the motion.
While Effissimo rarely comments publicly on its holdings, its actions suggest that it may be seeking to address governance issues at Nissan and its subsidiaries, particularly Nissan Shatai. This focus on governance and the potential for a profitable recovery in Nissan’s stock have led analysts to believe that Effissimo’s ultimate goal involves both value creation and structural reform within the company.
