Kathleen Gallagher, Investment Week, 28 March 2022:
The board of the £309.2m Fidelity Japan trust is seeking approval to double its unlisted exposure from 10% to 20% at its AGM on 17 May.
The announcement, made as part of the trust’s annual report released on 28 March, noted that at the end of last year the trust was invested in six unlisted companies, which accounted for about 5% of the portfolio.
“During the year, Coconala and Photosynth, two previously unlisted companies, both listed on the TSE Mothers market, while new investments were made in Business-to-Consumer online platforms in areas such as online travel services, personal finance and biotech,” the chair said in his statement.
Manager of the trust Nicholas Price said that he is “seeing a lot more entrepreneurial activity in Japan compared with five to ten years ago”.
“Being on the ground in Japan, and seeing many different companies, means that we are well placed to help entrepreneurs in the latter stages of their pre-IPO journey,” he continued. “We expect there to be an increase in such opportunities which offer a source of differentiated returns as we saw with the listings of Raksul and Coconala.”
In 2021, there were 125 IPOs in Japan, the highest since 2006. Government has also hinted more support could be on the way.
The Japan Securities Dealers Association has set up a panel to review the listing process and to address the issue of IPO prices being set too low, according to Price.
Jayna Rana, investment companies analyst QuotedData, said the move to increase the unlisted exposure was “exciting but unsurprising”.
She noted that Coconala, an online consumer-to-consumer freelancing platform that was referred to by both the chair and manager, saw its valuation increase by 351% on listing and gave the trust “a significant boost”.
“Fidelity has both experience and a successful history of investing in unlisted companies not just within FJV, but also Fidelity China Special Situations, which is well-known for benefiting from the IPO of Alibaba back in 2014,” Rana noted.
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