Tokyo Gas president: Asset sales will boost capital efficiency by Tokyo Gas

Tokyo Gas wants to increase capital efficiency through the sale of underperforming assets including real estate. This was announced by its president on Thursday following disclosures that activist investor Elliott Management had invested 5% in Tokyo Gas.

Elliott took a 5.03% share in Tokyo Gas earlier this month. The company is trying to get Japan's largest city gas provider to increase shareholder value.

Tokyo Gas President Shinichi Sasayama declined to comment at a press conference for a business update on the details of the company’s dialogue with Elliott. However, he said that the utility was looking to improve its capital efficiency in various ways, including by reviewing and selling assets which are inefficient.

He said: "We will review, and better utilize...not only real estate but also any assets which are not efficient to improve our capital efficiency", he added.

Elliott, a leading activist investor, believes that Tokyo Gas can improve capital efficiency and free capital for shareholder returns. It could also boost investments in areas such as decarbonisation, growth, and other growth by selling off some of its real estate assets that are not core to the main energy business.

Sasayama did not provide any details. "Some real-estate assets are contributing to a positive profit, but we might review and sell underperforming real-estate," he said.

Two people familiar with these discussions told the media in October that Tokyo Gas was in talks with Woodside Energy about acquiring a stake in an LNG export project in Louisiana worth billions of dollars.

Sasayama declined comment on the deal but said that the company could invest in U.S. assets if it contributed to profits. However, its focus is currently to expand the value chain of gas in the U.S., including trading, marketing and distribution.

Sasayama, Tokyo Gas's chief executive officer, said that the new U.S. sanction on Russia's Gazprombank has no impact on the company's purchase of fuel from Russia's Sakhalin-2 Project, which is exempted by the sanctions.

Last week, the U.S. imposed sanctions on Gazprombank as part of an effort to punish Moscow for its invasion in Ukraine. These included preventing it from engaging in any new energy transactions that would touch U.S. banking system. (Reporting and editing by Susan Fenton; Yuka Obayashi)

(source: Reuters)