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U.S. fund Third Point proposes IHI spin off property assets

May 2, 2014

U.S. hedge fund Third Point LLC has suggested that major Japanese machinery maker IHI Corp. should consider spinning off its real estate holdings, which have increased in value in recent months, into a separate company.

In a recent report to its investors, Third Point estimates that the value of the company's property assets has grown as a result of "Abenomics," the government's economic policy that features aggressive monetary easing.

Based on independent appraisals, the company's land bank in central Tokyo and buildings are worth "over 50% of IHI's current market capitalization," it said.

"Should management decide to spin off the property into a separate company that could achieve substantial financial leverage for redevelopment purposes ..., the company would realize enormous value for shareholders," it said.

The report also suggested that an increased focus on its high-return segments and its continued move away from "the suboptimal conglomerate structure of the past" would streamline its "path to value."

Third Point made headlines last year in Japan for its investments in leading companies. After acquiring a stake in Sony Corp., Third Point proposed in May that Sony spin off its movie and music business into a separate company. In November, it also took an interest in Softbank Corp.

Third Point's exposure to IHI was not immediately known.

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Source: Japan Economic Newswire

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