Report: Advantage Partners seeks partner for Tokyo Star

Japanese private equity firm Advantage Partners has reportedly hired Nomura Holdings to seek out an additional investor for its portfolio company Tokyo Star Bank.

The extra capital could potentially be used to pay down debt from the original buyout, which took place on March 2008, according to a Reuters report which cited “four people with direct knowledge of the matter”.

Advantage Partners did not respond to requests for comment and Nomura could not be reached by press time.

According to the newswire, Advantage borrowed a combined ¥169.6 billion (€1.47 billion; $2.05 billion) in mezzanine and senior loans for the ¥252 billion ($2.2 billion at the time) purchase of Tokyo Star. The senior loans, worth ¥124.6 billion, are due for payment in 2013.

In the 2008 transaction, Advantage Partners acquired 100 percent of the banks shares to delist it from the Tokyo Stock Exchange. Some 68 percent of the shares were acquired from the bank’s largest single shareholder, US firm Lone Star Funds.

According to a company statement from Advantage Partners at the time, the firm expected intense competition in the Japanese banking market to continue and justified the take-private as necessary in view of “near-term earnings fluctuation”. It expected the bank to be making “larger investments such as releasing new financial products and expanding marketing efforts to other regions”.

Lone Star acquired Tokyo Sowa Bank (which subsequently changed its name to Tokyo Star) in 2001 for ¥40 billion, after the lender collapsed under a pile of bad debt. In 2005, the US firm sold almost a third of its stake when it listed the bank on the Tokyo Stock Exchange.

Lone Star was reportedly originally looking at selling its remaining holding in the bank in April 2007, when TPG Capital and HSBC were identified as the early contenders for its stake.

In April this year, Advantage Partners sold a stake worth ¥10 billion in ailing Japanese retailer Daiei to Deutsche Securities, the investment arm of Germany’s Deutsche Bank.

In March, Advantage, in partnership with Japan’s Softbank and Japanese government-backed Enterprise Turnaround Initiative Corporation, pumped ¥5.3 billion into struggling mobile services company, Willcom, which had filed for bankruptcy in February. The Willcom bankruptcy lost previous investor The Carlyle Group $330 million in equity.

Established in 1992, Advantage Partners is currently deploying capital from its fourth buyout fund, which closed on ¥215 billion. The firm has offices in Japan and Hong Kong.