What was once a major Tokyo-based seller of fishing nets has recently been attracting the attention of foreign and domestic investors, both individual and institutional, thanks to a unique business strategy and an astonishingly fast pace of growth.
BSL Corp., listed on the second section of the Tokyo Stock Exchange, has impressed investors over the past year with an 8.5-fold increase in consolidated sales to 12.6 billion yen, and a turnaround from a 4 million yen consolidated loss to a pretax profit of 1.2 billion yen.
BSL’s improved financial performance, however, was the result of more than three years of effort to realize a dramatic metamorphosis from its core business — fishing nets — to modern-day investment.
This transformation by BSL (Balance, Sea and Land) has made it one of the most popular issues on the Japanese stock market, and its shares have undergone a roughly 5-fold rise in daily and yearly trading volume over the past year.
In fact, of the some 570 firms listed on the second section of Tokyo Stock Exchange, BSL Corp. was the most actively traded issue for the entire business year ended in March.
This has been a gratifying development, BSL CEO Hiroyasu Takei said.
“I have been out to resuscitate this almost dead company at a gallop for the past three years,” Takei said. “Now I have consolidated the foundation for its sustainable growth.”
Takei, an expert in investment and mergers and acquisitions, was brought aboard BSL in 2001 to reconstruct the slumping firm, which has a 130-year history selling fishing nets. Takei’s aim is to transform BSL into a modern-day investment firm and downsize its traditional core business.
For the past three years, Takei has been concentrating on raising funds from domestic and foreign investors. The company’s major shareholders as of March 31 were Japan Securities Finance Co., SIS SegaInterSettle AG and LGT Bank in Liechtenstein Ltd., which own stakes of 9.34 percent, 3.87 percent and 2.65 in BSL, respectively.
So far, Takei has spent some 5 billion yen on buying out or investing in a dozen unlisted companies in such promising areas as health care, food, fashion, insurance and the environment.
At present, BSL is either a full owner of or major shareholder in these companies, which include two American venture businesses — Sun Biomedical Ltd., a developer and manufacturer of biochemical devices, and Summit Design Technologies, Inc., a developer of CAD software for electronic circuitry.
Takei’s latest move is the acquisition, announced Thursday, of Coburn Japan Corp., a maker and marketer of specialty hologram films widely used in credit cards to foil counterfeiters. With a market share of 70 percent in Japan, the firm is expected to boost BSL’s consolidated sales by more than 1.36 billion yen a year.
Takei describes BSL’s strategy as “dual-track management,” centered on a unique combination of investment banking and holding company business.
“In other words, we are pursuing both cash-flow and capital-gains business,” he said.
Takei said he takes a hands-on approach to managing BSL’s various subsidiaries and affiliates by aggressively intervening in their business plans, personnel affairs and financial planning to boost profitability and market value.
To maximize the firm’s investment banking business, Takei constantly pursues new targets for investment in promising areas, and intends on investing 3 billion yen this year alone. He also plans to let at least one company in his group go public each year for the next three years to expedite the expansion of cash flow and the acquisition of capital gains.
Possible candidates for initial public offerings include Adiron Corp., a manufacturer and retailer of premier foreign-brand handbags that has a nationwide network of 800 retail outlets all over the country, and Mont-Thabor Co., an operator of a nationwide chain of premium bakeries with over 100 shops.
Another pillar of his strategy is to give investors steady returns. BSL surprised the market in March when it announced, as it did a year ago, that it would offer stock options to all shareholders at 5-1 ratio. It also announced a 2 yen per share dividend, marking its first distribution of profits to shareholders in 12 years.
With all these factors pulling for it, BSL’s market capitalization has skyrocketed, jumping more than 10-fold over the past three years from 2.8 billion yen in 2001, to 30 billion yen as of the end April.
“Don’t be surprised to see BSL’s market value hit 100 billion yen by the end of the current business year,” Takei said.
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