[Obayashi] Reducing Cross-Shareholdings — ¥285.2bn Sold in Five Years

Note: This article is a factual summary based on Obayashi Corporation’s published IR material (Investors’ Guide, June 2026 edition). It is not a recommendation to buy or sell any security. Figures are as of the publication of the source material. Investment decisions are your own responsibility.

Page 29 of the Investors’ Guide covers cross-shareholdings — shares Obayashi holds in other listed companies for business relationship rather than pure investment reasons, a governance topic that Japanese equity investors watch closely. Obayashi’s stated target is to reduce cross-shareholdings to 20% or less of consolidated net assets as soon as possible, and in any case before the end of March 2027. Proceeds from the sales are allocated to growth investments or shareholder returns, linking this page directly to Cash Allocation and Capital Policy & Shareholder Returns.

Why this page matters

Cross-shareholdings have been a governance focus across corporate Japan for several years, as companies come under pressure to justify holding capital in the shares of business partners rather than deploying it in their own operations or returning it to shareholders. For a general contractor like Obayashi, these stakes typically built up over decades of relationships with clients, suppliers and financial institutions. Selling them down does two things at once: it releases capital that had been tied up in shares the company does not control, and — because that capital counts as part of the equity base — it makes the “necessary equity level” discussed in Capital Policy & Shareholder Returns easier to manage toward its ¥1 trillion target.

Five years of balance history

The table below tracks the consolidated balance of cross-shareholdings — split between listed and unlisted stock — and its ratio to consolidated net assets, at each fiscal year-end.

Fiscal Year-End	Listed Shares	Unlisted Shares	Total Balance	% of Consolidated Net Assets
FY2021	¥306.2bn	¥16.4bn	¥322.6bn	32.6%
FY2022	¥274.6bn	¥13.0bn	¥287.7bn	27.8%
FY2023	¥390.7bn	¥12.7bn	¥403.5bn	33.8%
FY2024	¥262.2bn	¥11.2bn	¥273.5bn	22.6%
FY2025	¥276.2bn	¥12.5bn	¥288.8bn	21.9%
After reflecting agreed sales	¥217.8bn	¥12.5bn	¥230.4bn	17.5%

The 20% threshold corresponds to ¥263.2bn at the end of FY2025. Once sales that were already agreed but not yet executed are reflected, the balance falls to ¥230.4bn — a ratio of 17.5%, already below the 20% target ahead of the March 2027 deadline.

The balance does not fall in a straight line, and the detour is informative. It started at ¥322.6bn (32.6%) at the end of FY2021, dropped to ¥287.7bn (27.8%) in FY2022, then rose again to ¥403.5bn (33.8%) in FY2023 — the highest level in the five-year run — before falling sharply to ¥273.5bn (22.6%) in FY2024 and easing further to ¥288.8bn (21.9%) in FY2025. The FY2023 increase was driven mainly by rising share prices lifting the market value of the remaining holdings, not by new purchases, since cross-shareholdings are carried at market value and a broad equity rally can outweigh a year of steady selling. FY2024’s steeper decline reflected sales that progressed faster than planned that year, which also contributed to that year’s higher profit.

That distinction matters for how the table should be read: the total-balance and ratio columns are a mark-to-market snapshot influenced by the stock market as well as by Obayashi’s own selling, while the cumulative-sales figures below are a cleaner measure of the company’s own progress against its reduction program.

The listed and unlisted columns also behave quite differently. The unlisted balance has stayed in a narrow ¥11.2bn–¥16.4bn range across all six columns in the table, including the pro forma column, which suggests the reduction program is concentrated on listed stock rather than unlisted stakes. Nearly all of the movement in the total — up in FY2023, down in FY2024 and FY2025, down again in the pro forma column — comes from the listed-shares column instead.

Cumulative progress on sales

Obayashi also discloses the cumulative amount of cross-shareholdings sold since the start of the Medium-Term Business Plan 2022 (MTP2022, covered in Medium-Term Plan 2022 Strategy), which reached ¥285.2bn over FY2021–FY2025.

Fiscal Year-End	Cumulative Amount Sold Since FY2021
FY2021	¥16.9bn
FY2022	¥56.3bn
FY2023	¥146.3bn
FY2024	¥243.8bn
FY2025	¥285.2bn

On top of the ¥285.2bn already sold, a further ¥58.3bn of sales had been agreed but not yet executed as of the FY2025 disclosure. That agreed-but-unexecuted amount is what separates the FY2025 year-end balance (¥288.8bn, 21.9%) from the pro forma “after reflecting agreed sales” balance (¥230.4bn, 17.5%) in the table above. Read across the five years, the pace of disposals was not constant: the cumulative total moved only gradually through FY2022 and FY2023 before stepping up markedly in FY2024, when the total jumped from ¥146.3bn to ¥243.8bn in a single year.

What this means for investors

This page is best read alongside two others. In Cash Allocation, the planned sale of cross-shareholdings down to below 20% of net assets is counted as a ¥260.0bn source of cash over the five years of MTP2022. In Capital Policy & Shareholder Returns, the proceeds are one of the factors Obayashi weighs when setting its “necessary” equity level and funding flexible shareholder returns, including the ¥100.0bn share buyback. Together, the three pages describe the same capital-efficiency program from three different angles — the portfolio being sold down, the cash it generates, and what that cash is used for.

For a reader tracking Obayashi’s overall balance sheet, this page is also a reminder that not every year-over-year change in a capital-policy metric reflects a change in strategy. The underlying policy — sell down toward 20% or less, redeploy the proceeds — has been consistent since FY2021; the market-driven wobble in FY2023 sits on top of that policy rather than reversing it, and by the FY2025 pro forma figure the company already reports a ratio below its own target, ahead of the March 2027 deadline.

This article is part of our complete breakdown of the Obayashi Investors’ Guide 2026. See the hub article for the full series.

Note: This article is a factual summary based on Obayashi Corporation’s published IR material (Investors’ Guide, June 2026 edition). It is not a recommendation to buy or sell any security. Figures are as of the publication of the source material. Investment decisions are your own responsibility.