3D Investment Partners Sends Open Letter to the Board of NS Solutions

Business Wire

2 days ago

TOKYO--(BUSINESS WIRE)--3D Investment Partners Pte. Ltd. ('3D' or 'we'), an independent investment management firm providing discretionary investment services to a fund that is the largest minority shareholder of NS Solutions Corporation ('NSSOL' or the 'Company,' TSE Code: 2327.T), is committed to Japan-focused value investing with an investment philosophy centered on mid- to long-term value creation through compound capital growth.
Today, we have sent an open letter to NSSOL, and we would like to share an overview of its contents.
In the open letter, we disclosed the results of a survey of market participants (the 'Survey') conducted by an independent third-party research firm. The Survey revealed that a significant number of respondents share the following views: 1
64% of respondents answered 'Yes' to the question: 'Do you believe that NSSOL's corporate value and the interests of minority shareholders are being impaired by its parent company, Nippon Steel?'
100% of respondents answered 'No' to the question: 'Do you believe that NSSOL's outside directors are adequately fulfilling their role as representatives and advocates of shareholders?'
90% of respondents answered 'No' to the question: 'Do you believe that NSSOL's current Board of Directors maintains sufficient independence from Nippon Steel?'
72% of respondents answered 'No' to the question: 'Do you believe that NSSOL's new medium-term management plan sufficiently addresses the issue of value erosion caused by Nippon Steel?'
https://www.3dipartners.com/engagement/nssol-perception-study-en-202506.pdf
These results suggest that many market participants share the same concerns that we have long held with respect to NSSOL.
We have consistently pointed out that NSSOL's corporate value is being impaired due to its lack of full independence from its parent company, Nippon Steel. This includes various concerns identified in the Survey, such as economically irrational value erosion from transactions with Nippon Steel—such as low-interest deposits—as well as fundamental issues with the current Board of Directors and the inadequacies of the new medium-term plan.
https://www.3dipartners.com/engagement/nssol-presentation-en-202503.pdf
Based on the results of the Survey, we have reiterated our request that NSSOL's Board of Directors establish a special committee composed solely of independent outside directors to conduct a comprehensive and fundamental review, including a reassessment of NSSOL's relationship with Nippon Steel, with the aim of maximizing corporate value.
In the open letter, we also presented more concrete proposals directed at NSSOL. We encourage all shareholders to share with us any views or feedback they may have.
We would also be grateful if shareholders would refer to the materials provided as they consider how to exercise their voting rights at the upcoming Annual General Meeting, and as they engage in future dialogue with NSSOL.
We remain firmly committed to pursuing constructive engagement with NSSOL to enhance corporate value—grounded in the candid perspectives of shareholders.
【Letter to the Board of Directors】
June 2, 2025
〒105-6417
Toranomon Hills Business Tower
1-17-1 Toranomon, Minato-ku, Tokyo 105-6417, Japan
NS Solutions Corporation
To: Representative Director Kazuhiko Tamaoki
Board of Directors
1 Temasek Avenue
#20-02A, Millenia Tower, Singapore
3D Investment Partners Pte. Ltd.
Dear Members of the Board,
We commissioned an independent third-party research firm to conduct a perception survey (the 'Survey') of market participants regarding NS Solutions Corporation ('NSSOL' or the 'Company') between April and May 2025. We were not involved in the interviews, feedback analysis, report preparation or summarization of key findings, all of which were conducted exclusively by the independent research firm. Accordingly, we had no influence on the Survey results.
The Survey targeted a broad range of buy-side and sell-side analysts, both domestic and international, and we are highly confident in the objectivity of its findings.
The results of the Survey are summarized in Appendix 1. The findings indicate that many market participants share the following views regarding NSSOL:
The corporate value of NSSOL and the interests of its minority shareholders are being impaired by its parent company, Nippon Steel.
NSSOL's outside directors are not fulfilling their role of representing and advocating for minority shareholders.
The current Board of Directors of NSSOL lacks sufficient independence from NSSOL's parent company.
NSSOL's new medium-term management plan does not adequately address the issue of exploitation by the parent company.
These results demonstrate that many market participants share our concerns regarding NSSOL.
We have long pointed out that NSSOL's corporate value is being impaired due to the lack of full independence from its parent company, Nippon Steel. The issues we have identified include economically irrational value erosion from transactions with Nippon Steel—such as low-interest deposits—as well as the lack of independence of the current Board of Directors (the 'Board') and the insufficiency of the new medium-term plan, all of which are reflected in the Survey findings.
https://www.3dipartners.com/engagement/nssol-presentation-en-202503.pdf
In its new medium-term management plan, NSSOL has announced that outside directors will comprise a majority of the Board following the June 2025 Annual General Meeting. However, the results of the Survey indicate that a significant majority of market participants believe that the outside directors are not fulfilling their role of representing and advocating for minority shareholders. This clearly demonstrates that simply establishing a formal majority of outside directors is insufficient to assure market participants that the Board has developed a robust supervisory function over management.
In light of the concerns identified through the Survey, we hereby reiterate our request that NSSOL establish a special committee composed solely of independent outside directors to conduct a comprehensive review aimed at maximizing corporate value, including a reassessment of the Company's relationship with Nippon Steel.
If this review is led by independent outside directors, it would ensure independence from the Nippon Steel and enable a fundamental review of the relationship with the parent company. This, in turn, would allow for a resolution of the current situation in which NSSOL's value is being impaired and the interests of minority shareholders undermined. In addition, conducting the review with objectivity and transparency, under the oversight of independent outside directors, would allow NSSOL to restore confidence in market participants of the Board's independence.
To achieve the intended outcomes, the special committee must meet the following criteria:
It must be a committee under the direct authority of the Board, composed exclusively of independent outside directors, to ensure independence from Nippon Steel.
The scope of the review must include at minimum:
(i) Quantitative assessment of the value erosion resulting from the current relationship with Nippon Steel and consideration of concrete remedies.
(ii) Quantitative assessment of the growth potential currently constrained by the relationship with Nippon Steel and consideration of how to realize that potential.
(iii) Quantitative assessment and consideration of other areas for value enhancement that remain unrealized due to the lack of independence from Nippon Steel and the absence of a KPI-driven management approach focused on maximizing corporate and shareholder value.
To ensure the committee's effectiveness, a working group should be formed to support its operation, and a financial advisor with a proven track record in enhancing corporate value should be appointed.
In line with discussions in the 'Study Group on Minority Shareholder Protection in Subsidiary Listings' and the Tokyo Stock Exchange's December 26, 2023 guidelines on 'Enhancing Disclosure on Minority Shareholder Protection and Group Governance,' the committee should produce results within a reasonable period and disclose both the review process and its findings with sufficient transparency.
The above constitutes our current request to the Board.
We respectfully ask that you inform us by June 30, 2025, whether you are willing to establish such a special committee.
[Appendix 1]
Survey Results
1. On the relationship with Nippon Steel
64% of respondents answered 'Yes' to the question: 'Do you believe that NSSOL's corporate value and the interests of its minority shareholders are being impaired by its parent company, Nippon Steel?'
62% of respondents answered 'Yes' to the question: 'Do you believe that Nippon Steel's influence and control hinder NSSOL's management from maximizing corporate and shareholder value?'
100% of respondents answered 'No' to the question: 'Do you believe NSSOL provides adequate explanations to shareholders regarding transactions with Nippon Steel that may impair corporate value or minority shareholder interests?'
2. On Outside Directors
84% of respondents answered 'No' to the question: 'Do you believe NSSOL's outside directors engage in sufficient dialogue and interaction with shareholders?'
67% of respondents answered 'No' to the question: 'Do you believe NSSOL's outside directors appropriately supervise conflicts of interest between Nippon Steel and minority shareholders?'
100% of respondents answered 'No' to the question: 'Do you believe NSSOL's outside directors adequately fulfill their role in representing and advocating for shareholders?'
3. On the Board of Directors
90% of respondents answered 'No' to the question: 'Do you believe that NSSOL's current Board of Directors maintains sufficient independence from Nippon Steel?'
4. On the New Medium-Term Management Plan
72% of respondents answered 'No' to the question: 'Do you believe that NSSOL's new medium-term management plan sufficiently addresses exploitation by the parent company, Nippon Steel?'
Note: The above percentages have been calculated by excluding responses marked 'No opinion' and rounding to the nearest whole number.
About 3D Investment Partners Pte. Ltd.
3D Investment Partners Pte. Ltd. is an independent Singapore-based Japan focused value investing fund manager founded in 2015. 3D Investment Partners Pte. Ltd. focuses on partnering with managements who share its investment philosophy of medium- to long-term value creation through compound capital growth and a common objective of achieving long-term returns.
Disclaimer
This press release is provided for informational purposes only and does not constitute an offer to purchase or sell any security or investment product, nor does it constitute professional or investment advice. This press release should not be relied on by any person for any purpose and is not, and should not be construed as investment, financial, legal, tax or other advice.
3D Investment Partners Pte. Ltd. and its affiliates and their related persons ('3DIP') believe that current market price of NSSOL does not reflect its instinct value. 3DIP acquired beneficially and/or economic interest based on its own idea that NSSOL securities have been undervalued and provides attractive investment opportunity and may in the future beneficially own and/or have an economic interest in, NSSOL securities. 3DIP intends to review its investments in the NSSOL on a continuing basis and, depending upon various factors including, without limitation, the NSSOL's financial position and strategic direction, the outcome of any discussions with NSSOL, overall market conditions, other investment opportunities available to 3DIP, and the availability of NSSOL securities at prices that would make the purchase or sale of NSSOL securities desirable, 3DIP may, from time to time (in the open market or in private transactions), buy, sell, cover, hedge, or otherwise change the form or substance of any of its investments (including the investment in NSSOL securities) to any degree in any manner permitted by any applicable law, and expressly disclaims any obligation to notify others of any such changes.
No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness, or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets, or developments referred to herein. 3DIP expressly disclaims any responsibility or liability for any loss howsoever arising from any use of, or reliance on, this press release or its contents as a whole or in part by any person, or otherwise howsoever arising in connection with this press release. 3DIP hereby expressly disclaims any obligation to update or provide additional information regarding the contents of this press release or to correct any inaccuracies in the information contained in this press release.
3DIP disclaims any intention or agreement to be treated as a joint holder (kyodo hoyu sha) under the Financial Instruments and Exchange Act of Japan, a closely related party (missetsu kankei sha) under the Foreign Exchange and Foreign Trade Act with other shareholders, or receiving any power or permission to represent other shareholders in relation to the exercise of their voting rights, and has no intention to solicit, encourage, induce or require any person to represent such voting rights.
3DIP does not have the intention to make a proposal, directly or through other shareholders of NSSOL, to transfer or abolish the business or asset of NSSOL and/or NSSOL group companies at the general shareholders meeting of NSSOL. 3DIP does not have the intention and purpose to engage in any conduct which constricts the continuing and stable implementation of business of NSSOL and/or NSSOL group companies.
This press release may include content or quotes from news coverage or other third party public sources ('Third Party Materials'). Permission to quote from Third Party Materials in this press release may neither have been sought nor obtained. The content of the Third Party Materials has not been independently verified by 3DIP and does not necessarily represent the views of 3DIP. The authors and/or publishers of the Third Party Materials are independent of, and may have different views to 3DIP. The quoting Third Party Materials on this press release does not imply that 3DIP endorses or concurs with any part of the content of the Third Party Materials or that any of the authors or publishers of the Third Party Materials endorses or concurs with any views which have been expressed by 3DIP on the relevant subject matter. The Third Party Materials may not be representative of all relevant news coverage or views expressed by other third parties on the stated issues.
In respect of information that has been prepared by 3DIP (and not otherwise attributed to any other party) and which appear in the English language version of this press release, in the event of any inconsistency between the English language version and the Japanese language version of this press release, the meaning of the Japanese language version shall prevail unless otherwise expressly indicated.
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1 Percentages have been calculated by excluding respondents who answered 'No opinion,' and have been rounded to the nearest whole number.