Square Enix has been steadily rising on the Tokyo Stock Exchange since the end of April, and on June 17, the company jumped to its highest price since the beginning of the year (as reported by GameBiz).
This comes right after Square Enix announced a major change among its shareholders – as of June 16, Singapore-based activist investment fund 3D Investment Partners raised its stake in the company to 10.01%, becoming a major shareholder. Initially, 3D Investment Partners held a 5.47% stake in Square Enix (as of April 28), but this subsequently increased to 6.58%, 7.73%, 8.78% and 9.79% over the past weeks – before finally reaching 10.01%.
Not to be confused with any kind of political activism, activist investors like 3D Investment Partners generally seek to influence the management of the businesses they invest in to boost corporate value and increase shareholder returns – in other words, to make money. To do so, they will typically pressure a company’s leadership by proposing various changes in the company’s policy or management structure – for 3D Investment Partners, this has included anything from requesting resignations, hiring external directors, to asking companies to sell off property.
However, when it comes to Square Enix, the activist fund has not yet publicly made any such proposals. When the acquisition of shares was initially made public, 3D Investment Partners said that it would, “depending on circumstances, offer advice or make significant proposals to management.” This has caused some anxiety among Square Enix’s fans, who worry that potential changes could influence the company’s games. But given 3D Investment Partners’ lack of experience in the video game/entertainment industry, experts like Dr. Serkan Toto suggest that they are very unlikely to attempt to directly affect Square Enix’s product pipeline.
Instead, they are likely to be targeting the “excess” cash Square Enix has on hand (237.6 billion yen as of December 31, 2024). Activist investors will often pressure companies to use their cash reserves on things like share buybacks and other activities meant to maximize shareholder returns, so this could be a possible goal of 3D Investment Partners.
