TOKYO–(BUSINESS WIRE)–Panah Master Fund (“the Fund”) today has published its response to the Board of Directors of M&A Capital Partners Co., Ltd. (“MACP” or “the Company”) regarding their opposition to the shareholder proposals submitted by the Fund on 3 October 2025, which will be discussed at the Company’s upcoming 20th Annual General Meeting (“AGM”).
To recap, the Fund has proposed that the Company:
- Pay a one-time special dividend of ¥940 per share (or ¥990 per share if the Company’s Board of Directors does not propose an appropriation of surplus at the AGM), in order to bring its cash-to-market capitalisation ratio in line with the median of its domestically-listed peers, as well as to improve the Company’s capital efficiency.
- Implement a total shareholder return ratio of 50% or more relative to earnings per share each fiscal year, with 30% allocated to dividends from surplus and the remaining 20% implemented in the form of either share repurchases or additional dividends; and also establish a Special Committee, comprising all the Company’s outside directors and outside auditors, to provide recommendations to the Board of Directors for improving capital efficiency.
Unfortunately, MACP’s stated opposition to the submitted shareholder proposals is not grounded in any quantitative analysis or substantive business plan that allows investors to determine the Company’s surplus cash assets relative to its future capital investment needs. Instead, the Company continues to make vague qualitative statements regarding the need for “agility” and “flexibility” with respect to its future growth investments and shareholder returns policy, without providing shareholders with any detailed supporting plans. This lack of clarity is unacceptable.
As documented in the Fund’s original shareholder proposal and supporting reasons, the Company is hoarding cash assets well in excess of its ongoing working capital and capital investment needs. As stated in the Fund’s original proposal, this contradicts the basic principles of efficient capital management, lowers the Company’s return on equity (ROE) and return on invested capital (ROIC), and ultimately damages corporate value.
Below is a rebuttal to the Company’s main arguments against the Fund’s shareholder proposals:
1. MACP’s stated vision is to be “the world’s leading investment bank”. This is unrealistic, and raises concern among investors that the Company might seek to use its cash pile to pursue an undisciplined acquisition strategy, which might also include purchases of one or more foreign investment banking firms. The Fund’s strong view is that MACP should remain focused on the Japanese market, where it has already established a leading position. We urge the Company to clarify to all shareholders that any ambition to be “the world’s leading investment bank” merely refers to having a high M&A transaction volume in Japan (which places it at the top of global transaction tables for M&A activity), and that there are no plans to acquire any foreign investment banking firms. The board and management of MACP do not have sufficient foreign language or business experience to evaluate a foreign acquisition, and so any such development would be negatively received by shareholders. A meaningful reduction in the Company’s surplus cash assets, as proposed, would significantly lower the risk of a large-scale acquisition (foreign or otherwise), and likely lead to a positive rerating in the valuation of the Company’s shares.
2. While the Company envisions its acquisitions and investments to lead to further growth and enhance shareholder value, this is not supported by its historical track record. For example, as recently as 30 October 2025, MACP wrote down the value of its acquired company RECOF, demonstrating the fact that this has been a disastrous acquisition which did not, in contrast to MACP’s claims in its recent rebuttal, “[contribute] to the Company’s dramatic growth from 2017 onward”. Rather than making misleading statements of this sort, the Company should explain clearly to investors what mistakes were made before and after the acquisition of RECOF, as well as the key lessons learned. Similarly, the share price of Frontier Management has declined significantly since the date of MACP’s minority investment, and we understand that the Company did not conduct sufficient due diligence in advance of making this investment. MACP should communicate to all shareholders the rationale for the acquisition of this minority stake in Frontier Management, as well as how it will benefit the Company’s future growth strategy.
3. MACP states that paying a one-time special dividend of the amount proposed would “set our dividend payout ratio at approximately 571%”. This is a misleading metric in the context of a one-time special dividend payment. Since the Company’s establishment in October 2005, it has generated abundant cash flow while not paying out dividends for many years, ultimately only introducing a dividend policy (payout ratio of 30%) in the fiscal year ended September 2023. The proposed one-time special dividend should thus be viewed simply as a ‘catch up’ for dividends that the Company should have been paying to its shareholders over the majority of its corporate history. Even after such a large dividend payment, however, the key point to note is that the Company will still hold sufficient cash assets (in line with the median cash-to-market capitalisation ratio of its domestically-listed peers) and therefore retain ample capacity to pursue any reasonable growth strategy.
4. MACP further claims that the payment of a one-time special dividend of the amount proposed would “significantly restrict the agility of [its] growth investments”. It is unclear what the Company’s growth strategies entail, and we therefore encourage the Board of Directors to communicate clearly and in detail the Company’s capital needs to all shareholders. Otherwise, it makes no sense for a capital-light advisory business to hold such a large cash balance despite having no concrete and intelligent plans for its utilisation. This ‘lazy’ balance sheet further suggests that the Company has not paid heed to the most basic principles of efficient capital management, as continuing to hold large amounts of surplus cash lowers the Company’s ROE and ROIC, and ultimately damages corporate value. It also raises questions as to whether the current make-up of the Board of Directors is appropriate, or whether it would be appropriate to replace one or more of the existing Board members with independent candidates who have more relevant financial knowledge and experience.
5. Regarding the implementation of a suggested total shareholder return ratio of 50% or more relative to earnings per share each fiscal year, the Fund is not requesting that the Company implement any near-term share repurchases. Rather, we are proposing that 30% of the shareholder return ratio is allocated to dividends from surplus, and the remaining 20% is allocated flexibly in the form of either share repurchases or additional dividends, depending on prevailing market conditions. This is a capital allocation decision which should be made by the Board of Directors. The Fund’s proposal ensures that shareholder returns will rise, and the Board has the flexibility to return capital to shareholders in the most efficient way possible. It is unclear why the Company is opposing a progressive, shareholder-friendly proposal of this sort.
6. Finally, the Company’s resistance to implementing a Special Committee, comprising all the Company’s outside directors and outside auditors, to provide recommendations to the Board of Directors for improving capital efficiency, suggests that the Board has been captured by the major shareholder of the Company, who is also the President & CEO. We are concerned that the Board has lost its ability to oversee the Company’s management on behalf of all shareholders and to hold them accountable. Otherwise, why would the Board of Directors not agree to implement this relatively straightforward and uncontroversial proposal to help improve governance and accountability to all shareholders.
Call to Action
In summary, the Company’s communication to date with shareholders has been insufficient and severely lacking in detail.
We further note that the 20th AGM to discuss the Fund’s shareholder proposals has been scheduled for 25 December 2025, which is later than usual. Holding the AGM on Christmas Day – a public holiday in many countries – is disrespectful to many of the Company’s foreign shareholders and reflects poorly on the Board of Directors. It seems highly likely that the Company decided to schedule the AGM on this day to suppress participation in the AGM by foreign shareholders, including the Fund.
We therefore urge shareholders to vote FOR the proposals to restore capital discipline at the Company and better align management’s interests with those of all shareholders.
Contacts
Media contact:
JLX Partners Law Office / Foreign Law Joint Enterprise
[email protected]
+81-3-4588-4500
