TOKYO : Tokyo Gas aims to enhance capital efficiency by selling underperforming assets, including real estate, its president said on Thursday, following a filing disclosure of a 5 per cent stake investment by U.S. activist investor Elliott Management.
Elliott has taken a 5.03 per cent stake in Tokyo Gas, a regulatory filing showed earlier this month, as it seeks to push Japan’s biggest city-gas provider to boost shareholder value.
Tokyo Gas President Shinichi Sasayama, in a news conference to provide a business update, declined to comment on details of the company’s dialogue with Elliott, but said the utility is looking to improve capital efficiency through various ways including reviewing and offloading assets that are low in efficiency.
“We will review and better utilize… not only real estate, but also any assets that are not efficient, to improve our capital efficiency,” he said.
Elliott, one of the world’s most influential activist investors, views that Tokyo Gas could improve capital efficiency, free up capital to enhance shareholder returns, and boost investments in decarbonisation and other growth areas by divesting some assets from its extensive real estate portfolio that are non-core to main energy business, according to a person familiar with the matter.
“Some real estate assets are making a good profit contribution, but we may review and sell some underperforming real estate,” Sasayama said, without providing any further details.
Reuters reported in October that Tokyo Gas is in talks with Woodside Energy over taking a stake in a multi-billion-dollar Louisiana liquefied natural gas (LNG) export project, quoting two people familiar with the discussions.
Sasayama declined to comment on the deal, but said the company may invest in U.S. gas assets if they contribute to profits, though its current focus in the U.S. is to expand the gas value chain, including trading and marketing.
Asked about new U.S. sanctions on Russia’s Gazprombank, Tokyo Gas, a major LNG buyer, sees no impact on its procurement of the fuel from Russia’s Sakhalin-2 project, as the project is exempted from the sanctions, Sasayama said.
The U.S. imposed new sanctions on Gazprombank last week as part of a wider push to punish Moscow for its invasion of Ukraine, barring it from any new energy-related transactions that touch the U.S. financial system, among other restrictions.
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