Of Interest


Thursday, October 7, 2010

Investor sought for Struggling Tokyo Star

Owner Advantage Partners hires Nomura to advise; a sign of hard times at midsize lender
TOKYO—The owner of Tokyo Star Bank is searching for an investor to help it regain a sound financial footing, according to people familiar with the matter, a move that indicates difficulties at the midsize lender as bad loans have ballooned.

Tokyo Star Bank's owner, Advantage Partners, a Japanese private-equity fund, has hired Nomura Holdings Inc. as financial adviser in the search for an investor, the people said.

But whether Advantage Partners can find a new investor "is a big question," the people said.

Tokyo Star Bank, which deals mainly with small businesses and real-estate-related finance, is the latest Japanese midsize lender to show renewed signs of financial strain.

Advantage Partners bought 100% of Tokyo Star Bank for about 250 billion yen ($3.02 billion) from U.S. private-equity firm Lone Star Funds in 2008, after which Tokyo Star Bank was delisted.

Lone Star acquired Tokyo Star's predecessor, Tokyo Sowa Bank, in 2001 for 40 billion yen. The U.S. fund sold a third of Tokyo Sowa in an initial public offering in 2005, and the rest to Advantage Partners a little more than two years ago.

Advantage Partners borrowed more than 100 billion yen for the buyout. A new investment could be used to help repay the funds, one of the people said.

Japan's regional and midsize banks underwent a wave of consolidation as the business environment soured after the collapse of Lehman Brothers Holdings Inc. in 2008.

At the urging of Japan's banking regulator, Shinsei Bank Ltd.and Aozora Bank Ltd. reached a merger agreement in 2009, a plan that ultimately was scrapped this year.

Shinsei is about 28%-owned by U.S. investment firm J.C. Flowers & Co., while Aozora is about 50%-owned by U.S. private-equity firm Cerberus Capital Management LP.

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