US hedge fund Third Point, which has a reputation for aggressively pushing for change at target firms including Sony, has bought a stake in the Japanese operator of 7-Eleven convenience stores, it has said in a letter to investors.
The letter, written in Japanese, was unclear how much of an investment the fund set up by billionaire Daniel Loeb made and when.
But it said that Seven & I Holdings was undervalued compared to global competitors, and urged its chief executive to "spin off Ito Yokado supermarkets and rebuild it as an independent firm", referring to the firm's grocery chain.
"The future of Seven & I Holdings is an important test to show the success of Japan's reform in corporate governance," it said in the letter, dated Friday.
Competition among "konbini" stores -- a Japanese abbreviation of the English word convenience -- is fierce, with two of the biggest players, Family Mart and Uny Group, announcing a merger aimed at challenging 7-Eleven last month.
A staggering 1.5 billion people pass through the well-stocked, brightly lit stores every month in Japan, with some 55,000 outlets throughout the country, including more than 7,000 in Tokyo alone.
Late last year Loeb said Third Point had sold its stake in Sony after failing to push the company into spinning off part of its US-based entertainment division -- which includes a Hollywood movie studio and music label -- in a bid to boost its bottom line.
The Sony spin-off call was widely portrayed as a clash of corporate cultures, pitting a hard-charging foreign billionaire against one of the bedrocks of Japan's staid corporate sector.
Unlike Europe and the United States, shareholder activism is not firmly entrenched in Japan, and many local firms are suspicious of foreign private equity firms and dig in to resist their advances.
Third Point appeared undeterred by the Sony rebuff, however, revealing in February an investment in Japanese robot maker Fanuc.
It said the technology company was sitting on $8.5 billion in cash and had no debt, "which is hard to understand given the company's business quality, growth opportunities and low capital intensity".
Third Point pointed to Fanuc's "focus on producing only a limited number of products that are technically superior with the lowest possible cost structure".