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Cerberus makes $1.37bn Japan exit

The firm has exited its only real estate deal in Japan, offloading its 55 percent stake of operator Kokusai Kogyo to the founding family.

New York-based Cerberus Capital Management has exited one of its two investments in Japan, a majority stake in property company Kokusai Kogyo.

The deal was valued at as much as ¥140 billion (€1 billion; $1.37 billion), according to media reports.

Cerberus did not comment on the sale, but the reports have stated that the private equity firm has offloaded its remaining 55 percent stake in Kokusai to the company’s founding family. The price has been placed at between ¥130 billion and ¥140 billion.

Cerberus originally bought a 65 percent stake in Kokusai in 2004 for an undisclosed amount. It was also reported at the time that Cerberus bought approximately ¥500 billion in loans to the Japanese company for a 50 percent discount, from lenders including the UFJ Group, formerly Japan’s fourth-largest bank that was bought by Mitsubishi Tokyo Financial Group in 2005. It is understood, however, that once this final sale is complete, Cerberus will no longer have a stake in the company.

It is understood that several of the firm’s private equity funds were involved in the Kokusai investment. Cerberus does not have a dedicated real estate fund for Asia.

PERE understands that, in spite of the sale, the firm has no intention of leaving the Japan market. It was recently reported that Cerberus Japan K.K. appointed its chief operating officer Brian Saunders co-president along with Terry Suzuki.

The Kokusai exit marks Cerberus’ second major exit in Japan in two years, after the firm reportedly raised about JPY 146 billion (€1.2 billion; $1.7 billion) by selling its shares in Japan’s Aozora Bank, sister publication Private Equity International reported last January. This exit leaves Cerberus with only one major investment in the Japan market: a one-third stake in railroad and hotel operator Seibu Holdings.

Cerberus’ history in Japan has been rocky. The firm has had some tussles with the management of various of its portfolio companies around board representation and re-listings, some of them public. 

Kokusai itself even sued several Cerberus executives in 2009 after it lost money on asset sales and refinancing packages, though the suit was dropped by the Tokyo District Court last year.

With $23 billion assets under management, Cerberus also has offices in Beijing and Taipei for its Asia markets. It has also invested in real estate companies in Hong Kong in the past.