Elliott says Kansai Electric can become more attractive by selling non-core assets

By Katya Golubkova

TOKYO, Sept 11 (Reuters) - Activist investor Elliott Management, a shareholder in Kansai Electric Power 9503.T, said the Japanese utility could become a more attractive long-term investment by selling non-core assets and boosting profitability and shareholder returns.

Elliott has become one of the top three shareholders of Kansai Electric, Japan's biggest nuclear power operator by reactors online, with a stake of between 4% and 5%, a person familiar with the matter said on Wednesday.

In a statement issued from London on Wednesday, Elliott said it was looking forward to working with Kansai Electric's management and other key stakeholders to strengthen the company's core business.

"By increasing shareholder returns, unlocking capital from its non-core assets and improving profitability, we believe the company can enhance its funding flexibility for future growth and bolster its appeal as a long-term investment proposition," its statement said.

Elliott said it had a "significant" stake that made it one of Kansai Electric's biggest shareholders but did not disclose the size.

In a statement to Reuters, Kansai Electric declined to comment on its engagement with individual shareholders.

"As in the past, we will carefully communicate with shareholders through various opportunities," the company said.

Kansai Electric shares were up 3.1% in afternoon trading in Tokyo, outperforming the overall Nikkei index .N225, which was 0.65% higher.

Elliott wants Kansai Electric to boost its dividend to 100 yen per share from 60 yen per share and increase share buybacks by selling non-core assets, according to the source familiar with the matter, who was not authorised to speak publicly.

Elliott has identified non-core assets at the company worth more than 2 trillion yen ($13.58 billion), including over 1 trillion yen of real estate as well as a stake in a construction firm, the source said.

Elliott has been active in a push for Japanese companies to boost shareholder returns and corporate value, taking stakes in a range of companies including Tokyo Gas 9531.T, Sumitomo Corp 8053.T and Dai Nippon Printing 7912.T.

Apart from the energy business, Kansai Electric has assets in IT and real estate, among others, but it is targeting nuclear power as its main source of near-to-mid-term earnings growth. It plans to keep its dividend per share this fiscal year flat at 60 yen, despite a forecast 30% drop in profits to 295 billion yen.

($1 = 147.2800 yen)