Ripplewood to make 4x return on Japan Telecom

The New York-based fund has agreed to sell the company to Softbank for ¥143.3 billion.

Ripplewood Holdings has agreed to sell Japan Telecom to Japanese computer hardware and software group Softbank for ¥143.3 billion (€1.06 billion, $1.3 billion).

The New York-based fund led an investor consortium last November and bought the telecommunications company from Vodafone Group for ¥32.5 billion (€241 million, $295 million) in equity.

The original purchase of Japan Telecom gave Ripplewood a 51 percent stake in Japan's third largest fixed-line phone company. It was the largest leveraged buyout on record in the country, at ¥261 million with included debt.  Goldman Sachs, Newbridge Capital, PPM Ventures and other investors hold the remaining 49 percent share.

According to Bloomberg, Softbank is using the purchase of Japan Telecom to add about 170,000 customers, mostly businesses, as it looks to expand its Internet and broadband services operations. As part of the deal, Softbank will assume ¥164 billion in debt and buy ¥32.5 billion of preferred stock in the company.

Ripplewood will have the option of taking about half of its payment in eight million new Softbank shares, or a 2 percent stake, according to the news report.

The deal will mark the second major exit for Ripplewood in Japan this year. In February, Shinsei Bank, which the firm purchased for ¥121 billion in 2000, floated for ¥250 billion.

Ripplewood most recently made news when it announced plans to 'collaborate on new private equity investments' in the US and Europe with MidOcean Partners. The two firms also announced plans to raise a joint fund 'under the Ripplewood Holdings' umbrella.'