Horiemon Despises of Kitao

He revealed being proposed to manipulate stock prices 8 years ago and describing Kitao as “truly dirty person”

November 20, 2013

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On October 21st, Takafumi Hori, a.k.a. Horiemon attended a promotional talk-show on “2 Guns”, a Hollywood movie. The theme of the talk centered on the key word of the movie— “dirtiness”. Clad in his usual t-shirt and jacket, Horie referred to an interesting episode on a “truly dirty person” that he encountered when he was running livedoor (now changed name to Data Hotel), starting as follows: “I usually do not dislike people, but he was an exception. He was really dirty”. “I was offended by him a lot. I was thinking that he was the person who tainted the stock market.” Guess who this truly dirty person is.

In February 2005, livedoor abruptly announced that it had acquired 35% of Nippon Broadcasting, the parent company of Fuji Television. It was the beginning of the livedoor fuss. Apparently, Horie was a star of the business world by growing his start-up livedoor to a 100 billion yen market cap with 86 billion yen paid-in-capital, just in 10 years. He was daring of the time, also was envied by many. Amid such a mood, he acquired Nippon Broadcasting in a sizable lot.

Boasting “a record profit in full-year”

As Horie’s attempt to control Fuji TV was revealed, many “gentleman representing the establishment” criticized him. Horie talked reminiscently: “He visited me in livedoor, and proposed to cross-hold shares each other, and sell at the peak. I was embarrassed with his audacity. There were bunch of people who were canny and mean in stock market, but he was truly dirty. There are many dirty guys, but I learned truly dirty guy behaves like a gentleman”. Horie mimicked as if he was vomiting. He must be disgusted by the person. Even though Horie did not mention the name, the person must be nobody other than Yoshitaka Kitao, the president of SBI Holdings. Amid the big fuss caused by livedoor, Kitao, then the president of Softbank Investment, invited journalist at a conference, and suggested he could be a “white knight” by setting up a joint venture capital fund with Nippon Broadcasting and Fuji TV. He audaciously stated that “I am the most knowledgeable on M&A in Japan, as I dealt many deals since I was in Nomura Securities”. Pointing out his head, he boasted: “I got tremendous wisdom here in my brain!”. Most of attended journalists were astounded with his gigantic self-confidence. Kitao blamed Horie vehemently, as his conducts were “act of tainting the stock market”. Kitao often states that “clear water is flowing in the stock market”, but the phrase was quoted from Kiichiro Kiitaura, the former president of Nomura Securities bequeathing to his successor, Setsuya Tabuchi by saying, “don’t taint the clear undercurrent flowing at Nomura”. If we borrow Horie’s remarks, it is Kitao who taints the clear undercurrent.

Horie sent an article to FACTA of March 2013, when he was still in jail. His point was: Why Olympus, which concealed fraudulent accounting for more than 20 years until FACTA revealed, was kept intact as a listed company while livedoor, which had healthy liquidity, assets, and business but penalized heavily and being removed from the listing with just one year of accounting shenanigans. He claimed absurdity on equality under law.

On November 6th, SBI announced the second quarter earnings. Elated Kitao stated: “I can see a record profit in full-year”. His remark must have based on the “quarterly profit attributable to owners of parent company (cumulative)” amounting to 17.57 billion yen.

Yet, that is a cumulative number. If you look into the 1st quarter earning announced on August 8th, the similar number stood at 16.269 billion yen. In short SBI added only 1.3 billion yen in 2Q. Can SBI expect windfall profit like that of the Reprocell IPO in 3Q and 4Q?

SBI Savings Bank of Korea, which changed the name from Hyundai Swiss Savings Bank, recorded 2 billion yen pretax profit. SBI said the bank hastens loan recovery, broaden operating area, and further profit can be expected. Yet, their corporate lending attempts, which we touched on last month, are not going well, a Korean finance source comments to us. According to Economic Reform Institute, a Korean think tank, even Hyundai Group, one of the top 20 chaebol groups, could cause a “calamity in the financial market”. It has been slow to complete structural reform, and property investment turned sour. That Hyundai is different from the Hyundai Swiss, but the fate looks similar to the SBI Savings Bank.

IPO not realizing?

In the earnings presentation, an analyst questioned to Kitao that “the IPO of Acucela, which you mentioned at the 1Q is not mentioned today. Could you show us the road path?” Kitao replied that “we cannot comment as (IPO) timing is getting closer”, but as we reported, IPO sponsor is reluctant for Acucela, and the fact Kitao’s name disappeared from the directors list of Acucela may imply the demise.

Kitao explained IPO of SBI Biotech with Mizuho Securities as IPO sponsor. We revealed in April issue that SBI used double standard on the price of the stock price of SBI Biotech. When investors of SBI-managed private equity fund sold the stake, the price was at 28,847 yen (as of end of January 2013), while SBI’s valuation of its own holdings was priced at 187,934 yen, more than 6 times of investor’s liquidation value. Such deeds might be a part of reason, that Mizuho Securities is supposedly not positive on underwriting the SBI Biotech IPO. “A record profit” is now seen? Is that record profit real?

SBI released on November 11th, stating that its written complaint on FACTA’s article was submitted to Tokyo Metropolitan Police and was accepted. Section 2 of the TMP just received the paper. We regard SBI’s exultancy groundless. We will strike back doubly, as we did against Tokushu-kai.