Texas firm Lone Star is preparing to sell its 68 percent stake in Tokyo Lone Star Bank to Japanese private equity firm Advantage Partners, according to Reuters, for an estimated ¥195 billion ($1.7 billion; €1.2 billion).
The anticipated price of ¥350,000 to ¥400,000 per share would represent a 27 percent premium to Tokyo Star’s closing price of ¥314,000 yen on Thursday. Lone Star did not immediately return requests for comment.
Lone Star acquired Tokyo Star Bank, originally called Tokyo Sowa Bank, in 2001 for ¥40.4 billion. As previously reported by PEO, the bank initially struggled under a welter of problem loans, but Lone Star turned it around with the aid of American president and chief executive Todd Budge, partly by focusing on high margin retail lending.
In October 2005 Lone Star listed a third of the bank on the Tokyo Stock Exchange for ¥430,000 per share. The private equity firm earned ¥230 billion from the sale, or more than twice its initial investment.
Lone Star is rumoured to have accelerated its plans to sell its remaining stake in the bank earlier this year, after running into regulatory trouble with the South Korean government over another investment in the banking sector.
The firm was on the verge of selling its 51 percent stake in Korea Exchange Bank to HSBC this summer for $6.3 billion, when Lone Star’s original acquisition of the bank came under scrutiny. South Korea’s Financial Supervisory Service accused Lone Star of having illegally depressed the loss-making bank’s stock in order to acquire it for $1.2 billion in 2003.
Nonetheless, HSBC decided to press on with the deal. In September HSBC signed a definitive agreement to buy the bank, with the condition that if the deal is delayed past 31 January 2008, HSBC will pay a further $133 million. The agreement also stipulated that if the deal had not received regulatory approval by 31 April 2008, the bank would be able to withdraw its bid.
At a news conference today Korea Exchange Bank’s chief executive Richard Wacker told reporters that Lone Star and HSBC are “very, very committed to accomplishing this deal”.