Strategic Capital, Inc., a Tokyo-based investment manager, told Japan's Kanto Local Finance Bureau on July 8 that it has raised its stake in GungHo Online Entertainment, Inc. (TYO: 3765) to 13.67%, up from 10.51% in its previous report. It is the fund's ninth amended large-shareholding report on GungHo.
The fund now holds 7,267,500 shares of GungHo's 53,161,416 shares outstanding. Of that position, 7,267,400 shares sit inside a discretionary investment contract with Intertrust Trustees (Cayman) Limited. Strategic Capital has pledged 800,000 of those shares as substitute collateral to Tachibana Securities Co., Ltd. and separately lent 500,000 shares to the same broker under a securities lending agreement. The filing states the change triggering this report relates to significant contracts such as collateral agreements.
| Metric | Value |
|---|---|
| Current holding ratio | 13.67% |
| Previous reported ratio | 10.51% |
| Shares held | 7,267,500 |
| GungHo shares outstanding | 53,161,416 |
| Total funding for acquisition | ¥20.84bn |
| Own funds portion | ¥275,000 |
Total funding behind the current position comes to roughly ¥20.84bn, of which only ¥275,000 is Strategic Capital's own money; the rest is drawn from other sources, including margin trading arranged through Tachibana Securities. The filing does not break out how much of that ¥20.84bn total went toward the specific increase from 10.51% to 13.67%, since the figure covers the fund's entire current holding.
Strategic Capital's stated purpose is unchanged from its prior reports: constructive dialogue with GungHo's management alongside what it calls material proposals to improve shareholder value. Those proposals include restructuring GungHo's capital policy by increasing use of interest-bearing debt and reducing shareholder equity, pursuing a delisting through acquisition by a third party, raising dividends, and having GungHo buy back shares held by Taizo Son and by other shareholders that Strategic Capital judges to be substantially controlled by him.
The filing itself carries no comment from GungHo's board on any of these proposals, leaving the next move with the company's management.