Leading Independent Proxy Advisory Firm ISS Recommends Shareholders Elect Both of NHGGP’s Candidates to the Toyo Suisan Board  

Today, Nihon Global Growth Partners Management Inc. (“NHGGP”) announced that Institutional Shareholder Services, Inc. (“ISS”), a leading independent proxy advisory firm, has recommended that shareholders vote for the election of both qualified outside director candidates nominated by NHGGP, via an affiliated fund, to the Board of Toyo Suisan Kaisha Ltd. (2875.T) (“Toyo Suisan” or the “Company”) at the upcoming Annual General Meeting. The investor group led by NHGGP collectively owns approximately 4% of Toyo Suisan’s common shares.

In its report, ISS supports NHGGP’s contention that Toyo Suisan’s capital allocation approach is problematic and that new perspectives with relevant expertise are needed on the Board:¹

• “…capital misallocation hasn't gone unnoticed: over the five years prior to the dissident's campaign announcement, the company traded at an average 25 percent discount to the median of peers...”

• “…the opportunity cost of having c. 60 percent of capital tied to low yielding assets is substantial”

• “The release of the new mid-term plan and cost of capital estimate made clear the company is not planning to meaningfully address the most important issues in the near future, which underscores the need for change. As such, shareholders are recommended to support dissidents Kotaro Okamura and Masami Kashiwakura, who would bring valuable capital allocation and operating experience to the board.”

Specific to Board composition and the lack of important expertise, ISS writes:

• “The governance structure is weak, with a board composed, until recently, of 10, mostly long tenured, insiders and five independents.”

• “Of the independents, two are academics, one is a lawyer, one is a retired regional bank executive, and one is an executive at a federation of agricultural cooperatives. Collectively, they do not appear to have the right credentials to address the most critical issues for investors.”

• “The presence of former CEOs with such long tenures on the board, coupled with independent directors with limited or no business executive experience, is unlikely to facilitate a new approach to capital allocation.”

ISS concludes that NHGGP’s nominees would be additive to the Board:

• “The dissidents bring investment banking, capital allocation, international operating and public board experience to the table, experience that is mostly lacking among the current independent directors.”

Brian Doyle, Managing Partner of NHGGP, stated: “We are grateful that ISS has recognized the case for change at Toyo Suisan. In its well-reasoned report, ISS rightly highlights that the Company’s approach to capital allocation is hindering its value creation potential for all stakeholders and that new outside directors with relevant expertise are needed to ensure that Toyo Suisan adopts capital and shareholder return policies that are aligned with market norms. As ISS notes, our two director nominees – Mr. Kotaro Okamura and Mr. Masami Kashiwakura – would bring exactly such expertise. With their decades of relevant experience, we believe their addition to the Board would be beneficial for all shareholders. We look forward to engaging with our fellow investors around the importance of electing our two fully independent nominees in the coming weeks.”

NHGGP previously issued a presentation detailing the case for change at the Board level and the need for new independent directors with expertise aligned with the Company’s needs. The presentation can be viewed here. Additionally, a letter from NHGGP to fellow shareholders is available here.

About NHGGP

Nihon Global Growth Partners Management Inc. (“NHGGP”) is a long-term investor in Japanese listed companies that are growing rapidly in markets outside of Japan. Prior to founding NHGGP in 2018, its principals were involved in managing several private equity funds in Japan beginning in 2004. All of the principals’ prior private equity investments involved Japanese companies where a substantial portion of the growth was in markets outside of Japan. NHGGP manages private investment vehicles including the NHGGP Japan Opportunities Fund L.P., which was launched in 2021.

¹ Permission to quote ISS was neither sought nor obtained. Emphasis added.

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