Japanese insurers, banks to sell Honda shares worth $3.3bn

Tokyo — Japanese financial groups including Tokio Marine, Sompo and two MS&AD units will sell Honda Motor shares worth ¥535bn ($3.3n) to unwind cross-shareholdings, a regulatory filing shows.

Mitsubishi UFJ and Mizuho, Japan’s first- and third-largest financial groups, also plan to participate in the sale, a sign that the unwinding of cross-shareholdings is catching pace as part of Japan’s corporate governance reforms.

Cross-shareholding, or companies holding shares in each other, has long been seen as a way to reinforce business ties in Japan. But governance experts and foreign investors said it led to lax governance by protecting management from shareholders.

The secondary share offering from a total of 10 financial institutions would come up to 300-million shares including over-allotment, with the price yet to be decided. Honda’s shares ended at ¥1,791 on Thursday, valuing the offering at about ¥535bn. 

The four non-life insurers, which include MS&AD Insurance subsidiaries Mitsui Sumitomo Insurance and Aioi Nissay Dowa, have previously said they would cut their entire cross-shareholdings to zero in a few years, in response to a price-fixing scandal last year.

Honda has already announced plans to buy back up to ¥300bn worth of its own shares during the current financial year. It announced no further share buyback on Thursday.

Honda was one of the top five cross-shareholding companies for the insurers except for Aioi Nissay Dowa Insurance, according to securities filings in March.

Reuters