(Reuters) – A New York-based hedge fund with a reputation as an activist investor has proposed that Sony Corp spin off its entertainment division via an IPO, saying the move could boost the Japanese electronics firm’s shares by as much as 60 percent.
An IPO of Sony Entertainment, which includes one of Hollywood’s leading film studios and one of the world’s biggest music labels, would generate funds for Sony’s electronics business and help reduce its debt held by the electronics company, Third Point said.
Third Point, a $13 billion hedge fund founded by billionaire investor Daniel Loeb, said it would put up 150-200 billion yen ($1.5-$2 billion) to support a public offering for Sony Entertainment.
The hedge fund, in a letter to Sony Chief Executive Kazuo Hirai, has recommended Sony sell a 15-20 percent stake by offering subscription rights to existing Sony shareholders.
“Our plan shifts that paradigm and we believe, if managed properly, it could result in as much as 60 percent upside to Sony’s share price,” Third Point said in a statement.
An official at Sony said its entertainment businesses are important growth contributors and are not for sale.
Third Point said it is the largest owner of Sony, holding shares worth 115 billion yen ($1.13 billion). Sony currently has a market value of close to $18.5 billion.
Loeb is one of the most closely watched hedge fund managers in the $2.25 trillion industry. His fund is known for building a sizeable position in distressed Greek government bonds last year and investing heavily in Yahoo shares.
Third Point’s flagship hedge fund gained 1.4 percent in April, pushing returns to 10.5 percent for the year, according to an investor note reviewed by Reuters.
($1 = 101.7450 Japanese yen)