Title: Role of engagement fund: Does it have a relevance to you?

Speaker: Mr. Shoichi Oka, Partner Solaris Management Co., Ltd.

Abstract: Mr. Oka is a partner of Solaris Management, a leading engagement fund in Japan. Engagement funds play a unique role in the investment landscape. Engagement funds invest in companies with the intention of actively engaging with management and influencing corporate decision-making. The primary objective of engagement funds is to create long-term value for shareholders by advocating for changes that they believe will improve the company’s performance, governance and sustainability practices. Engagement funds typically take substantial stakes in target companies and use their influences to promote amicably to their management strategic, operational, governance, or other types of reforms. Solaris Management focuses on the reforms in the strategic areas that many Japanese businesses are facing such as achieving carbon neutrality and managing operations in China.  Mr. Oka will use live examples of engagements to facilitate the understanding in the role of engagement funds. Also on-going engagements by Solaris may have relevance to Okinawa and OIST in the future. He will share his observations on that point as well.

Syllabus for the lecture on December 4, 2023 at OIST

Lecturer Mr. Shoichi Oka is a partner of Solaris Management, the leading engagement funds operating in Japan. Mr. Oka is a very experienced professional with long years of experiences in global M&A and business restructuring. He formerly served as a CEO of PwC’s financial advisory and consulting services in Japan from 2002 to 2010.

The lecture intends to facilitate students’ understanding in the role of investment fund, using a few on-going live investment examples, focusing on; 1) how investment targets are identified; 2) how the hypothesis for the reformation approaches to enhance the corporate value of the investment targets are developed; 3) how investment funds approach investment target’s management to implement the reform. The followings are the live examples of investments:

• Leading manufacturer of poly-silicon in the globe

• Key component of semi-conductor supply chain which is of economic national security interest.
• Low corporate value due to its high level of CO2 emissions from its captured coal burning power generation plant.
• Only realistic way to reduce its CO2 emissions, “co-burning with biomass”.
• Understanding in biomass fuels and co-burning with coals in power generation.
• Engagement to help secure biomass fuels from Australia.

• Global leading manufacturer of a key chemical necessary for the production of printed circuit boards

• #1 share of solder resist globally and heavy reliance in China market (50% of total sales).
• Rapidly growing needs to manage geopolitical risks coming from the “Chips War” between China, Japan and the US .
• CEO is vocal of his aspiration to transform the company from a speciality chemical company to a chemical conglomerate through its business portfolio diversification.
• Unusually high operating margin (23%), as a Japanese chemical company.  The current valuation of the company is at par with global chemical companies’ norm.
• Listing of its China subsidiary’s stock in China may provide a solution to the geopolitical risks as well as an enabler of CEO’s aspiration.
• Engagement together with Warburg Pincus, one of the largest private equity funds in the globe.

• Observation of Okinawa now and future and OIST’s role

• No appeal for investor except for real estate assets in hospitality sector.
• End of global borderless market and shift to connectivity between independent domestic markets.
• Advantage of Okinawa’s proximity to various Asian markets to “connect”. Okinawa should aim to become a hub of connectivities between the various Asian markets.
• Technology is the key driver of the connectivity between the Asian markets.
• Role of OIST going-forward as a technology hub in Asia, promoting scientific research, facilitate collaboration and driving innovation.
• Similar to most of the US technology educational instructions OIST should consider introducing MBA program.  Integration of technology and business and development of leadership skills at OIST are some of the key critical success factors for Okinawa to become the connectivity hub in Asia.

CV of Shoichi Oka, Partner, Solaris Management Co. Ltd. Tokyo, Japan

• Mr. Oka joined Solaris Management in 2020 as a partner of this leading engagement fund in Japan. He is responsible for the engagements with Solaris’ invested companies.
• Mr. Oka has been active in both global M&A and business restructuring markets for over 30 years. From 2014 to 2020, he led PwC’ global M&A origination team in Hong Kong focused on Asia based large and medium cap deals.
• In 2015 he successfully completed an origination, funding and lead advisory engagement in the formation of multi-billion US $ JV investment fund between a leading Japanese and a leading global private equity fund leading Japanese bank which focuses on the investment opportunities in Japan.
• He served as a senior advisor on various business merger and restructuring engagements including Mitsubishi Motors, Sharp, Takata, Mitsubishi Paper and Cosmo Oil between 2014 to 2019.
• From 2010 to 2013, Mr. Oka managed as a CEO, the start-up of Japan Industrial Solutions (JIS), a US $1 billion private equity investment vehicle funded by MUFG, SMBC, Mizuho and DBJ. He led 4 investments in underperforming TSX listed companies, including SUMCO, a globally leading manufacturer of silicon wafer, JEOL, another global leading manufacturer of electron microscope, and ALVAC, a leading vacuum technology engineering firm, for over $400 million in aggregate and actively led the turnaround of these businesses.
• Prior to 2010, Mr. Oka was the CEO of PwC Advisory in Japan for 8 years. He led the start-up and the growth of the financial advisory business to the leading business restructuring advisory firm in Japan with over 300 professionals during the period.

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