June 25, 2024

DealBook: Cerberus to Sell $2.5 Billion Stake in Japanese Bank

Brian Prince, left, newly named chairman of Aozora Bank, and Shinsuke Baba, newly named president and chief executive.Tomohiro Ohsumi/Bloomberg NewsBrian Prince, left, newly named chairman of Aozora Bank, and Shinsuke Baba, newly named president and chief executive.

TOKYO — The private equity firm Cerberus Capital Management will start selling its $2.5 billion stake in Japan’s struggling Aozora Bank this year, the Asian lender said on Thursday, in a much-anticipated exit for the firm more than a decade after its initial investment.

Ceberus, based in New York, will sell a portion of its 55 percent stake in Aozora in a share buyback plan, Aozora said in a news release. The firm will sell its remaining Aozora shares in the capital markets or through private transactions, the statement said.

Shares in Aozora plunged on the news, ending the day down 9 percent at 232 yen, or about $2.99, in Tokyo. At that price, a sale of Cerberus’s entire stake would fetch about $2.5 billion.

Cerberus has not yet decided on the sale’s pace and pricing, Aozora said. The bank, based in Tokyo, also said it was replacing its chief executive, Brian Prince, with Shinsuke Baba, the bank’s chairman.

Representatives of Cerberus in Tokyo could not immediately be reached.

Aozora’s predecessor, the Nippon Credit Bank, was temporarily nationalized in 1998 during Japan’s banking crisis. The government then sold off large stakes in the bank to investors, including Cerberus, which had hoped to profit from Japan’s distressed assets.

Despite an attempted turnaround, Aozora, a mid-size lender in the Asian country, has struggled to carve out a lucrative business, squeezed between Japan’s megabanks and smaller regional lenders that dominate local lending.

Last month, Aozora said it would take more than a decade to pay back about 180 billion yen in public money that it owed the government.

Cerberus has already more than doubled its initial 100 billion yen investment in Aozora when it sold part of its holdings during the bank’s 2006 relisting. But Aozora’s share price has slumped amid the financial crisis and has struggled to recover, limiting any further upside for the American firm and spurring its executives to explore a possible exit.

Article source: http://dealbook.nytimes.com/2012/09/27/cerberus-to-sell-2-5-billion-stake-in-japanese-bank/?partner=rss&emc=rss

Speak Your Mind