Baillie Gifford Shin Nippon targets up to 10% in unquoteds – Baillie Gifford Shin Nippon (BGS) has reported preliminary results for the year to January 19. The net asset value per share (after deducting borrowings at book value) fell by 6.1% compared to a 7.8% fall in the comparative index (MSCI Japan Small Cap index). Shares in BGS fell by 7.2%.
In sterling terms over three years, the MSCI Japan Small Cap index is up 45.4%, whilst the net asset value and share price are up by 83.8% and 91.0% respectively.
Key highlights
The company provided the following key highlights:
Weak Chinese demand affects Japanese small caps
- Weak Chinese demand over the past year had a negative impact on some Japanese small caps.
- However, many of the rapid growth, online businesses that the company owns performed well.
- Bengo4.com, which operates a website that connects lawyers with individuals and businesses seeking legal advice, was the largest positive contributor to performance.
- New investments included Raksul, which has developed an online, cloud-based system that connects service providers with clients in real-time; Akatsuki, a mobile gaming company; and Uzabase, a financial software company.
- The company is seeking shareholder approval to permit investment in unlisted companies at a level of up to 10% of the portfolio (measured at time of investment).
Chairman’s outlook
Neil Donaldson, chairman, BGS, said: “As a UK listed company, the board and managers have considered the implications of Brexit. Around half of the company’s investments are domestically focussed within Japan and the remaining holdings have minimal exposure to the UK. The Board is therefore not concerned about the impact of Brexit on the portfolio. Although the Y/£ exchange rate may react according to the market’s view on the Brexit outcome reached, which would affect the value of the company’s shares, its borrowings are denominated in Yen so any exchange movements impacting the loans would be more than offset by opposite exchange movements affecting the portfolio.
More broadly, there seems to be greater uncertainty in the world regarding global growth than at any time over the last 10 years. However, the company’s strategy of seeking to identify smaller Japanese companies with strong growth potential means that the performance is more dependent on the ability of those companies to take advantage of their opportunities than on the global economy.”
BGS : Baillie Gifford Shin Nippon targets up to 10% in unquoteds