Unlocking Value in Japanese Financial Conglomerates: Why Farallon's Push at T&D Holdings Could Be a Game-Changer

The Japanese financial sector is notoriously resistant to change. Cross-shareholdings, opaque governance, and a preference for stability over growth have long stifled value creation. But what happens when a seasoned activist investor like Farallon Capital targets a $20 billion financial conglomerate with a 4.6% stake? The answer could redefine how we view governance reform in Japan—and unlock massive upside for investors bold enough to act now.

Let's dive into T&D Holdings (TSE: 8762), where Farallon's proposals to overhaul governance and board composition are setting the stage for a potential value explosion.

Why Governance Matters in Japanese Financial Conglomerates
Japanese financial groups like T&D are labyrinthine. Cross-shareholdings between subsidiaries—meant to “protect” stakeholders—often lead to inefficiency and diluted focus. At T&D, these cross-holdings (equity stakes in other firms) still account for 17% of net assets. While the company has reduced them from 30% in 2020, Farallon argues this isn't enough.

Farallon's Bold Play: Four Pillars of Reform
Farallon's proposals aren't incremental—they're a reset button for T&D. Here's what's on the table:

1. Cross-Holdings Reduction: Farallon wants a “true and meaningful” cut to these intercompany stakes, freeing capital for core businesses like insurance and asset management.
2. Risk Mitigation: T&D's sprawling portfolio includes risky ventures. Farallon insists on pruning non-core assets to boost stability and profitability.
3. Taiyo Life Turnaround: The insurer, a T&D subsidiary, has lagged peers. Farallon's push to improve its margins could add billions in value.
4. Board Overhaul: Adding two independent directors—Ina Kegler (ex-Allianz CFO) and Ken Mohan (ex-MetLife SVP)—would boost expertise in insurance governance and risk oversight.

Why does this matter? Because T&D's current board, while compliant with Japan's “one-third independent director” rule, lacks the urgency to act. With 6 of 10 directors as outsiders, the board has prioritized continuity over transformation. That's why Farallon's nominees—proven leaders in global insurance—are critical.

The AGM Stakes: A Fork in the Road
The June 2025 AGM is a make-or-break moment. If shareholders back Farallon's nominees, T&D could finally pivot from “status quo” to “value creator.” If not? The stock, which has underperformed peers despite a 10.4% ROE (up from 5.9% in 2020), risks stagnation.

Look at the numbers: T&D's adjusted profit has nearly doubled since 2020, and its Price-to-Book Ratio (PBR) has climbed to 1.25x from 0.54x. But compare that to its peers: MS&AD's PBR is 1.8x, Sompo's 1.6x. T&D is undervalued—and governance reform could close the gap.

The Risk? Comfort in Complacency
T&D's board has already shown resistance to change. In May 2025, they rejected a rival shareholder proposal to add directors, citing “strong performance.” But here's the catch: that “performance” includes a record ¥100 billion share buyback and a 60% dividend payout ratio. These are good moves, but they're defensive. Farallon's vision is offensive: using governance to unlock $3–5 billion in value via cross-holdings sales, cost cuts, and subsidiary turnarounds.

Why You Should Act Now
This isn't just about T&D—it's about a broader trend. Japanese conglomerates are finally facing pressure to modernize. Investors who bet on activist-driven governance reforms (like in Sony or Recruit Holdings) have reaped outsized returns. T&D is next.

The Call to Action
Buy T&D now, ahead of the AGM. If Farallon's nominees win, the stock could surge 20–30% as value unlocks. Even if they lose, the debate will force T&D to address cross-holdings and governance, creating a floor under the stock.

This is a “win-win” moment. The risk-reward is skewed in your favor: governance reform is inevitable in Japan, and T&D's size and diversification make it a prime candidate. Don't miss this chance to profit from change in a sector ripe for disruption.

Final Take: Farallon's push isn't just about board seats—it's about rewriting the playbook for Japanese financials. Act now, or watch the value train leave without you.