TPG has agreed to purchase up to ¥20 billion ($180 million; €123 million) of shares and stock warrants in loss-making Japanese lender NIS Group, as well as invest $102.5 million to acquire 50 percent of NIS’s Chinese leasing subsidiary, Nissin Leasing Co.
NIS primarily lends to small- and medium-sized enterprises, but is also active in real estate finance, investment banking and non-performing loan servicing. The finance company said in a statement that it had encountered difficulty after Japan’s Moneylending Business Law was amended in 2006 to increase government regulation and borrower protection.
The investment from TPG will strengthen NIS’ capital base and funding position, NIS said, and TPG will give NIS operational support as it adjusts its business model to cope with the new market conditions.
“The transaction enlarges and strengthens the base of NIS and allows us to take advantage of the opportunities in a challenging market environment which has weakened competition,” NIS chief executive Kunihiko Sakioka said in the statement.
TPG has turned around distressed Asian financial institutions in the past. In 2004 TPG paid RMB1.2 billion ($163 million; €111 million) for a controlling stake in China’s Shenzhen Development Bank through its Asian affiliate Newbridge Capital.
In 1999, Newbridge paid $416 million for a 51 percent stake in Korea First Bank after a long negotiation fraught with delays. The firm later lost its majority holding Korea Deposit Insurance Corp., which exercised warrants to increase its stake in the bank to 51.4% from 49%.