December 1, 2020

Japanese Consultant Becomes Billionaire By Battling Activist Investors

The recent rise of shareholder activism in Japan has boosted the stock price of Tokyo-listed IR Japan, a consultancy specializing in shareholder relations, elevating its CEO Shirou Terashita into the ranks of the world’s billionaires.

Terashita, 61, saw his fortune rise to $1 billion as shares of IR Japan soared 247% over the past year. He declined to comment for this story.

Investors are optimistic about the growth potential of the Tokyo-based firm, which is said to have a high level of expertise in proxy fights at shareholder annual general meetings and also provides advisory services like measures to counter activist investors.

In the quarter ended in June, IR Japan said its sales had jumped 9.7% from a year earlier to 2.38 billion yen (about $20 million). The company’s net profit came in at 913 million yen, up 7.8% from the same period last year.

The quarterly rise came on the back of an even more impressive performance for the fiscal year 2020. IR Japan reported that sales had jumped 59% to 7.7 billion yen for the year ended March, and its net profit soared 150% to 2.4 billion yen.

“Activists are moving aggressively during the corona pandemic,” the company said in its report. The number of activist funds submitting shareholder proposals has already reached a new high this year.

The government of Prime Minister Shinzo Abe had been pushing for lasting reforms, introducing a stewardship code in 2014 aimed at enlisting Japan’s institutional investors to press companies to improve their profitability and capital efficiency. The following year, the country adopted a corporate governance code that created a complementary set of rules for companies to follow.

“The pressure to overhaul corporate governance, business, and asset portfolios has reached a record high, which is suggestive of the submission of shareholder proposals or the exercise of proposal rights by activists, and Japan has now transformed into the second-largest activist market in the world after the United States,” the firm noted in the report.

IR Japan was established in 1984 and started out by helping listed companies prepare for meetings with investors and translating presentation materials into English. Terashita joined IR Japan in 1997, eventually taking over the firm through a management buyout in 2008.

Last month, IR Japan was featured in Forbes Asia’s Best Under A Billion list, which highlights 200 public companies in the Asia-Pacific region with less than $1 billion in revenue and consistent top- and bottom-line growth.

Terashita stands out among the billionaires in Japan, many of whom are involved in the fast-growing tech sector. He has worked in the investor relations field his entire career, beginning in 1982, right after graduating from Aoyama Gakuin University with a degree in business administration.

— With assistance by James Simms.

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