Listing the subsidiaries one by one: the multi-listing group model (2000)

What separation protected

Splitting the equity business by business can be read as a device for pushing the contest over money and people outward, to the market. The payments company gathers people on the payments share price; the hosting company builds its pay packages on the hosting share price. The parent has less allocation to arbitrate, and each company’s managers answer to their own share price. It is also, by design, a structure that takes on in advance the situations in which minority shareholders’ interests diverge from the parent’s — and to that objection GMO has answered not by folding the model up but by listing more companies.

There were moments when having separated paid off. When losses in consumer lending brought the parent to the edge of negative net worth in 2007, what it turned into cash was about 10% of GMO Hosting & Security, its eBank shares, and the whole of GMO Internet Securities. Because it held subsidiary shares that carried a market price, it did not have to sell itself. The reason the number of listed subsidiaries keeps rising is written more plainly in the cash management of late 2007 than in any statement of philosophy.