Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Quiddity Advisors

Thematic (Sector/Industry)

Japan Consumer discretionary / Thematic (Sector/Industry)

METI announced a reorganization of the INCJ (Innovation Network of Japan) this past summer. The INCJ was originally set up in July 2009, tasked with spending government money to promote innovation in Japanese companies where it needed to be supported (sometimes that was inside existing Japanese companies which were otherwise troubled). The GFC proved that global finance crises could quash availability of long-term equity funding. So as the IRCJ (Industrial Revitalization Corporation of Japan) had wound up operations in March 2007 based on Article 43 of the Industrial Revitalization Corporation Act, a new vehicle was needed.
The INCJ was set up officially as a private-public investment fund (with a mandate to continue with investment activities through 2025), designed to avoid the image it was really a government investment fund. There was a government investment and 25 private sector companies - mainly blue chips found in the top 100 companies in Japan - "co-invested." The government supplied 96% of the initial capital, the private sector "co-investment" was 4%.
There have been dozens of investments (the portfolio is <a href="https://www.incj.co.jp/english/performance/list/" target="_blank">here</a>) with the most famous being <a href="https://www.smartkarma.com/entities/15933" target="_blank" data-smartkarma-citation="entities:15933:1">Renesas Electronics (6723 JP)</a>, and other well-known efforts being an attempt at <a href="https://www.smartkarma.com/entities/391" target="_blank" data-smartkarma-citation="entities:391:1">Sharp Corp (6753 JP)</a> which was "lost" to <a href="https://www.smartkarma.com/entities/745" target="_blank" data-smartkarma-citation="entities:745:1">Hon Hai Precision Industry (2317 TT)</a>, and an investment in <a href="https://www.smartkarma.com/entities/8280" target="_blank" data-smartkarma-citation="entities:8280:1">Japan Display (6740 JP)</a>. That said, the vast majority of investments are actually venture and early stage companies which are almost completely unknown, even to the well-informed professional investor community.
The profile of the INCJ was somewhat enhanced through the passage in 2013 of the Industrial Competitiveness Enhancement Act (METI's explanation of the Act is <a href="http://www.meti.go.jp/english/publications/pdf/journal2014_05a.pdf" target="_blank">here</a>, and the Cabinet's one-pager is <a href="https://www.kantei.go.jp/jp/singi/keizaisaisei/pdf/housin_gaiyou_140124en.pdf" target="_blank">here</a>), which was new PM Abe's legal base for executing his "Japan Revitalization Strategy", which was deemed to be a big early part of the so-called Third Arrow of Abenomics.
In May of this year, the Act on Special Measures for Productivity Improvement and an Amendment to the Industrial Competitiveness Enhancement Act were passed, coming into effect in June and July, respectively.
<ul class="">
<li>The Special Measures Act provided for a so-called "regulatory sandbox" system whereby business plans certified by the government for use of innovative technologies or new business models could execute certain preparatory work (demonstrations, pilot tests, etc) which would not otherwise be allowed under existing regulations, and tax breaks for IoT investment.</li>
<li>The Partial Revision to the Industrial Competitiveness Enhancement Act included a tax deferral for transferees of shares which were part of a merger or acquisition so as to promote M&amp;A using share consideration. This is effectively the same as a basis roll for a private holding. Also instituted was a relaxation of the requirements for a "demand for share" request, normally used by a buyer/owner of more than 90% a company to squeeze out minorities. That limit was lowered to two-thirds. There was also a measure on spin-offs, allowing a company to spin off a portion of its business without shareholder approval. </li>
</ul>
When the Partial Revision went into effect, that triggered a split of the company such that as of September 2018, all of the business functions of the Innovation Network Corporation of Japan were transferred to <a href="https://www.incj.co.jp/english/about/about/" target="_blank">INCJ, Ltd</a>, which was <a href="https://www.j-ic.co.jp/en/news/pdf/pressrelease_e.pdf" target="_blank">established</a> as a subsidiary of newly formed Japan Investment Corp (<a href="https://www.j-ic.co.jp/en/" target="_blank">JIC</a>) (nota bene: the Japanese name translates to Industrial Innovation Innovation Organization). Otherwise, the previous INCJ investments run as before.
But JIC is not your normal Japan revitalization fund. It has 2 trillion yen of funding at its disposal to start, and it will now launch "new funds."
It will go global, and will go 'engaged' - not quite activist, but on the spectrum.

METI announced a reorganization of the INCJ (Innovation Network of Japan) this past summer. The INCJ was originally set up in July 2009, tasked with spending government money to promote innovation in Japanese companies where it needed to be supported (sometimes that was inside existing Japanese companies which were otherwise troubled). The GFC proved that global finance crises could quash availability of long-term equity funding. So as the IRCJ (Industrial Revitalization Corporation of Japan) had wound up operations in March 2007 based on Article 43 of the Industrial Revitalization Corporation Act, a new vehicle was needed.
The INCJ was set up officially as a private-public investment fund (with a mandate to continue with investment activities through 2025), designed to avoid the image it was really a government investment fund. There was a government investment and 25 private sector companies - mainly blue chips found in the top 100 companies in Japan - "co-invested." The government supplied 96% of the initial capital, the private sector "co-investment" was 4%.
There have been dozens of investments (the portfolio is here) with the most famous being Renesas Electronics (6723 JP), and other well-known efforts being an attempt at Sharp Corp (6753 JP) which was "lost" to Hon Hai Precision Industry (2317 TT), and an investment in Japan Display (6740 JP). That said, the vast majority of investments are actually venture and early stage companies which are almost completely unknown, even to the well-informed professional investor community.
The profile of the INCJ was somewhat enhanced through the passage in 2013 of the Industrial Competitiveness Enhancement Act (METI's explanation of the Act is here, and the Cabinet's one-pager is here), which was new PM Abe's legal base for executing his "Japan Revitalization Strategy", which was deemed to be a big early part of the so-called Third Arrow of Abenomics.
In May of this year, the Act on Special Measures for Productivity Improvement and an Amendment to the Industrial Competitiveness Enhancement Act were passed, coming into effect in June and July, respectively.

The Special Measures Act provided for a so-called "regulatory sandbox" system whereby business plans certified by the government for use of innovative technologies or new business models could execute certain preparatory work (demonstrations, pilot tests, etc) which would not otherwise be allowed under existing regulations, and tax breaks for IoT investment.
The Partial Revision to the Industrial Competitiveness Enhancement Act included a tax deferral for transferees of shares which were part of a merger or acquisition so as to promote M&amp;A using share consideration. This is effectively the same as a basis roll for a private holding. Also instituted was a relaxation of the requirements for a "demand for share" request, normally used by a buyer/owner of more than 90% a company to squeeze out minorities. That limit was lowered to two-thirds. There was also a measure on spin-offs, allowing a company to spin off a portion of its business without shareholder approval. 

When the Partial Revision went into effect, that triggered a split of the company such that as of September 2018, all of the business functions of the Innovation Network Corporation of Japan were transferred to INCJ, Ltd, which was established as a subsidiary of newly formed Japan Investment Corp (JIC) (nota bene: the Japanese name translates to Industrial Innovation Innovation Organization). Otherwise, the previous INCJ investments run as before.
But JIC is not your normal Japan revitalization fund. It has 2 trillion yen of funding at its disposal to start, and it will now launch "new funds."
It will go global, and will go 'engaged' - not quite activist, but on the spectrum.

Japan's New But Not New Govt-Backed PE/Engagement Fund