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Shares in Nissan surged as much as 20 per cent on Tuesday, after a fund managed by activist investor Effissimo Capital Management was revealed to have taken a stake in the struggling Japanese automaker.
Singapore-based hedge fund Effissimo is famous for its high-profile campaigns against some of the biggest names in corporate Japan including Toshiba and transportation company Kawasaki Kisen.
Nissan’s stock closed up 12 per cent in Tokyo, recouping much of last week’s collapse after it unveiled measures including 9,000 job cuts following a quarterly loss and the second annual profit downgrade of the year.
The deterioration in Nissan’s financial performance has spurred market speculation that the company, which is now worth Y1.54tn ($10bn), could be a takeover target or trigger a wider shake-up in Japan’s automotive industry, according to analysts and brokers.
Japan’s third-largest automaker has been plunged into crisis as it confronts brutal competition from Chinese electric car rivals led by BYD. Its alliance with France’s Renault is fading and Nissan has recently partnered with Honda to survive increasing competition with Chinese rivals. Last week, it announced an emergency turnaround plan.
After slashing its annual profit forecast by 70 per cent to ¥150bn, Nissan vowed to enact a slew of restructuring steps including slashing production capacity by 20 per cent, selling down its stake in Mitsubishi Motors by 10 per cent and cutting chief executive Makoto Uchida’s pay.
Effissimo, a secretive fund run by Japanese managers, is known for its campaign against Toshiba which culminated in a buyout that privatised the company.
Nissan’s half-year results filing showed that Cayman Island-based Suntera had bought 2.5 per cent of Nissan’s stock as of the end of September, listing Suntera as the trustee of ECM Master Fund.
A separate filing in 2021 by Sanken Electric said ECM Master Fund is managed by Effissimo.
Nissan would not confirm whether the acquisition was done by Effissimo but said that it did “appreciate all existing and new shareholders that support and believe in the future potential of Nissan”.
Effissimo did not immediately respond to a request for comment.
On the company’s earnings call last week, Uchida said Nissan was hit by tough competition in China and its lack of a strong hybrid model for the US market.
“The biggest issue is our inability to hit the sales plans in past years,” he said. “Another big challenge is our inability to deliver the right products that cater to the customers’ needs in a timely manner.”
Analysts have grown increasingly nervous that Nissan’s credit rating could be downgraded if the company cannot execute its turnaround plan.
“We believe operational mis-steps in executing its turnaround plan could lead to credit rating downgrades by all three agencies,” said Todd Duvick, head of autos at CreditSights, a credit market research company.
