US buyout firm Cerberus Capital Management LP CBS UL is planning to sell most of its stake in Japanese lender Aozora Bank Ltd in a global offering that could be worth more than JPY200 billion (US$2.3 billion), sources with direct knowledge of the sale said.
Aozora, around half of which is owned by Cerberus, said in September that Cerberus was planning to cut its stake. The bank did not clarify at the time how the firm planned to divest its holding.
Shares in Aozora plunged 10 per cent, or JPY28, to JPY250 by the close on Monday on news of the plan, as investors sold on fears that an influx of Aozora shares onto the market would dilute the stock and send it lower. The drop wiped JPY45.8 billion (US$520.22 million) from the firm’s market capitalisation.
The sale, which may be announced as early as Monday, will be completed by the end of this month, the sources said.
Morgan Stanley and Goldman Sachs Group Inc are among the sale’s underwriters, sources familiar with the matter said.
A spokesperson for Aozora Bank declined to comment.
Aozora was valued at JPY458 billion as of early on Monday, making Cerberus’ stake in the bank worth about JPY230 billion.
Cerberus, named after the mythical many-headed dog that guards the gates of the underworld, was co-founded by Stephen Feinberg in 1992. Feinberg, a Princeton graduate, worked at bond trader Drexel Burnham Lambert before launching the firm.
One of the world’s largest private equity firms, it led the ill-fated investment into US automaker Chrysler in 2007.
The New York-based private equity fund bought mid-sized lender Aozora, formerly called Nippon Credit Bank, after the bank was temporarily put under government control during Japan’s late-1990s financial crisis, when many Japanese banks struggled under the weight of bad loans.
Cerberus bought a minority stake in Aozora in 2000, then boosted its holdings in 2003 to become the lender’s biggest shareholder. It took the bank public in 2006.
The New York based firm is known as a savvy debt investor, and also for keeping as low a profile as is possible.
Cerberus has gained attention recently for its interest in buying US grocery chain Supervalu, and its plans to sell gunmaker Freedom Group, whose Bushmaster AR-15 rifle was used in the Connecticut school massacre last month.
The Aozora Sale would mark another exit from Japanese investments for Cerberus, which plans to sell its holdings in Seibu Holdings, an operator of railways, resort hotels and real estate properties. It has hired investment banks to handle that sale, sources told Reuters.
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