Cerberus plans to list Aozora Bank

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Cerberus, the US private equity group, is aiming to list Aozora Bank next month at the earliest in what could be the largest initial public offering in Japan this year.

The IPO of Aozora, which Cerberus won in 2003 after a heated bid battle with Sumitomo Mitsui Financial Group, would allow the group to pay back the Japanese government, which has preference shares in the bank worth about $2.4bn.

Cerberus could sell about 30 per cent of its 62 per cent stake in the Japanese bank, which is valued at $10bn for the current common equity.

The US group acquired its stake in 2003 for Y101bn after Softbank, then the largest shareholder in Aozora, decided to sell its stake to focus on its core telecoms business.

Orix, the leasing group, and Millea Holdings, the insurance group, have retained stakes of 14.99 per cent each in Aozora.

The listing of Aozora would represent the closing of a chapter in Japan’s banking history when troubled Japanese banks were acquired cheaply by foreign private equity groups .

Shinsei Bank, which was formerly known as the Long-Term Credit Bank of Japan and was acquired by Ripplewood, the US private equity group, was listed in 2004 in an offering worth about Y250bn.

Tokyo Star Bank, rehabilitated by Lone Star, another active private equity investor in Japan, was listed last year and raised about $750m for its US parent, which sold a 30 per cent stake.

Lone Star acquired what was then Tokyo Sowa Bank in 2001 for $339m. The acquisition of Japanese banks by foreign private equity groups unleashed a storm of criticism at the time, over concerns that Japan was selling its assets cheaply to what were seen at the time as “vulture funds”.

Since then, however, the idea of private equity groups helping to turn round troubled companies, including financial institutions, has won greater public acceptance, with many Japanese funds coming into the market.

Cerberus, which is contract purchaser of a controlling interest in GMAC, the financing arm of GM, has been one of the most active investors in Japan, taking early stakes in a range of companies, such as Nagasakiya, the supermarket group, and Dia Kensetsu, a condominium developer.

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