Report: Cerberus in $1.7bn Japan exit

The US-based private equity firm has sold its stake in Aozora Bank in one of the country's largest private equity exits in recent years.

Cerberus Capital Management has raised about JPY 146 billion (€1.2 billion; $1.7 billion) by selling its shares in Japan’s Aozora Bank, media reports said, citing a term sheet seen by Reuters

The firm is reportedly selling 632.5 million shares in Aozora at JPY 231 per share, equal to a discount of 3.3 percent from its closing price of JPY 239 on 16 January. The price represents a discount of 7.6 percent to the stock’s closing price of JPY 250 on 7 January, when the offering was launched.

Cerberus did not respond to requests for comment by press time. 

Cerberus originally acquired a 49 percent stake in Aozora Bank for ¥101 billion in 2003, Private Equity International reported earlier. The firm had planned to merge the bank with Shinsei Bank in July 2009 as a result of both Shinsei and Aozora suffering annual losses of JPY 143 billion and JPY 243 billion respectively. However, the deal was terminated in 2010 for undisclosed reasons. 

The Cerberus exit is likely the largest seen in Japan in recent years and serves as another sign that private equity activity in the country may be picking up. During 2012, the country saw two significant deals including Permira’s $1.24 billion buyout of Akindo Sushiro and Bain Capital’s $1 billion acquisition of Jupiter Shop Channel. 

Firms are now approaching Japan with renewed interest. Speaking at the recent HKVCA Private Equity Asia Forum in Hong Kong, managing partner of Kohlberg Kravis Roberts Asia, Joseph Bae, highlighted Japan as a key focus for the firm in 2013 and for the duration of the firm’s second Asia fund, which is expected to close soon on $6 billion. 

Bae explained the firm has been cautious about Japan over the past five years as it hasn’t offered a compelling risk-reward story. However, he said KKR’s prediction is that Japan will become “very relevant”, and offer a number of large scale opportunities going forward as many large Japanese corporates lack operational capabilities and expertise in growing companies abroad. Bae expects at least three or four investments from the KKR Asia Fund II to be made in Japan.