Shinsei Bank said yesterday a group of overseas investors led by New York-based fund J.C. Flowers & Co LLC will spend up to ?202.3 billion (US$1.8 billion) to take a stake of up to 32.6 percent in the mid-sized Japanese bank.
The move is designed to help strengthen its investment and retail banking operations will make the investor group Shinsei's top shareholder, the bank said.
Shinsei Bank was created in 2000 when a consortium led by the US investment firm Ripplewood Holdings purchased the defunct Long-Term Credit Bank.
Tokyo-based Shinsei said four investment funds run by the head of J.C. Flowers, J. Christopher Flowers, will buy ?50 billion of new shares to be issued by the Japanese bank in March.
Flowers is a member of Shinsei Bank's board and controls 10.4 percent of the its outstanding shares.
The investor group will also launch a tender offer for Shinsei Bank shares from Nov. 22 to Jan. 10 to buy on the open market up to 22.7 percent of the bank's outstanding shares, excluding Shinsei's treasury stock.
It will spend up to ?152.34 billion in the tender offer, paying ?425 each for 358.5 million shares.
Shinsei shares closed at ?398n, up 9.3 percent in morning trading on the Tokyo Stock Exchange.
If successful, J.C. Flowers-led investors will have a 32.6 percent stake in Shinsei Bank, the bank said. Shinsei Bank said it will remain listed on the Tokyo Stock Exchange.
The Japanese government now holds 12 percent of Shinsei, along with preferred shares that can be converted to 269.1 million common shares by March. After the conversion, the government's stake in Shinsei would rise to about 27 percent if Shinsei doesn't buy the shares back.
The investors' offer for Shinsei comes at a time when the Japanese bank's profits are under pressure from exposure to the crisis in US subprime mortgage lending, as well as weak domestic business stemming from sluggish economic growth.
The news comes on the same day Sumitomo Trust and Banking Co and Aozora Bank Ltd said they plan to pool their real estate and asset management operations.