Major Japanese insurers plan $3.1b Honda share sale

Four major Japanese insurers and other financial institutions are planning to sell a combined 500 billion-yen ($3.1 billion) worth of shares in Honda Motor.

The insurers involved include Tokio Marine Holdings, Sompo Holdings, and two units of MS&AD Insurance Group. These firms, along with other unnamed financial institutions, will collectively offload their Honda holdings.

Honda is expected to approve the sale soon. To offset the effects of this major sale, Honda has already announced a share buyback programme of up to 300 billion yen for the current fiscal year.

The automaker declined to comment on the insurers’ sale, stating that it hadn’t officially announced such information. Spokespeople for Tokio Marine and MS&AD also remained silent. Sompo hasn’t yet responded to a request for comment.

This sale represents a major step in unwinding the longstanding practice of cross-shareholdings in Japan, where companies hold significant stakes in each other.

The four insurers and their parent companies collectively held over 300 billion yen in Honda shares as of March. They also had a total of 9 trillion yen in cross-shareholdings across companies like Toyota Motor, Shin-etsu Chemical, and Itochu.

This decision follows a business improvement order issued by Japan’s Financial Services Agency in December 2023. The order, issued after discovering price-fixing in corporate insurance fees, mandated these insurers to reduce their cross-shareholdings.

Following the news report, Honda’s share price experienced a decline in late-day trading, dropping 1.7 per cent to 1,727 yen. This came after reaching a high of 1,801 yen earlier in the session.

Attribution: Reuters