Activist investor Daniel Loeb's Third Point LLC said it acquired a stake in Japan's second-largest grocery and retail group Seven & i Holdings Co. and proposed a spinoff of its supermarket unit.

The New York-based company "continued to add to" its investment in Seven & i, it said in a letter to investors Friday, without disclosing how large of a stake it holds. It also proposed the Japanese company's unit Ito-Yokado Co., which has "notable record of underperformance," should be spun off and restructured as a standalone company.

Loeb's investments come as he has extolled Prime Minister Shinzo Abe's efforts to improve corporate governance, saying the move opens the way for activist investors to gain by helping improve the way companies deploy cash. The Seven & i investment is at least Loeb's fifth in two years in Japan.

"Shareholders have suffered from the subsidization of Ito-Yokado for so long that Seven & i is emerging as one of the most crucial tests for the success of corporate governance reform in Japan," Third Point said in the letter.