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Elliott owns 5% stake in Tokyo Gas ( TKGSF ), urges it to sell real

estate

assets

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Tokyo Gas ( TKGSF ) may use proceeds from asset sale for

investments,

shareholder returns

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Asset sales not limited to real estate, president says

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Utility targets ROE of 8% or higher in FY2025/06

By Yuka Obayashi, Miho Uranaka and Katya Golubkova

TOKYO, Jan 16 (Reuters) - Tokyo Gas ( TKGSF ) has been

identifying assets, including from its vast real estate

portfolio, to be sold to fund growth investments, its president

said, though no decisions have been made yet on what to sell.

The company is facing pressure from U.S. activist investor

Elliott Management, which bought a 5.03% stake in Japan's top

city gas provider last year, to divest parts of its extensive

real estate portfolio to boost shareholder value.

Tokyo Gas ( TKGSF ) President Shinichi Sasayama said asset reviews are

conducted regularly to improve capital efficiency.

"We've been identifying assets that should be sold to fund

necessary growth investments, not limited to real estate, to

enhance corporate value," Sasayama told Reuters in an interview

on Wednesday.

The company may use the funds for growth investments or

shareholder returns, he said, declining to comment when

disclosures could be made. The utility typically unveils plans

for the next fiscal year either in March or during its earnings

announcement.

Sasayama declined to comment on interactions with Elliott

but emphasized that the utility is taking diverse investor

feedback into account, with some seeking solid investment for

growth and others advocating for improved asset efficiency.

"It will be difficult to satisfy the needs of all investors,

but we will do what we think we should do", he said.

Shares in Tokyo Gas ( TKGSF ) surged over 20% following the news

Elliott became a shareholder on Nov. 19, but are now up about 9%

since then.

The utility aims for a return on equity (ROE) of 8% or

higher in the year ending March 2026, up from around 4.8%

projected for the current year, and announced a 40 billion yen

($256 million) share buyback plan in October.

Elliott believes Tokyo Gas ( TKGSF ) could free up capital to bolster

shareholder returns and invest in growth by divesting some

non-core assets, including a building housing the Park Hyatt

Tokyo hotel and land in Toyosu where the city's biggest fish

market is located, a source familiar with the matter said in

November.

Tokyo Gas's ( TKGSF ) recent securities report values its real estate

assets at 580 billion yen, far below Elliott's estimate of over

1 trillion yen, according to the source.

Sasayama declined to comment on a Reuters report of talks

with Woodside Energy ( WDS ) over a stake in a Louisiana

liquefied natural gas export project, but said: "We aim to

connect our gas value chains in North America and link our

trading operations in Japan and Asia with those in the U.S. ...

We would consider investments if they align with our vision."

($1 = 156.3100 yen)