Advantage Partners to Launch $2.2 Billion Tokyo Star Bid

Japanese private equity fund Advantage Partners has agreed to launch a roughly 250 billion yen (US$2.21 billion) bid for Tokyo Star Bank and will make an announcement as early as Thursday, financial sources said.

Advantage Partners plans to launch a tender offer next month for the 68 percent stake held by investment fund Lone Star. It also plans to buy out minority shareholders, the sources said.

Advantage will offer about 360,000 yen per share, the sources said, a 5 percent premium to Wednesday's close of 342,000 yen and roughly one-fifth above its level in early September when it was unclear if the deal would go through.

The bid should bring to an end a tortuous few months for the funds, which have had to steer the deal through a storm in global credit markets and a tough regulatory review.

The private equity firm has already notified Japan's financial regulator of its plans, the sources said.

Advantage had been expected to pay close to 410,000 per share but had trouble gathering support from lender banks who were afraid that any loans would have to be quickly marked down due to violent swings in credit prices, sources said in October.

Lone Star acquired Tokyo Star's predecessor, Tokyo Sowa Bank, in 2001, for 40.4 billion yen after the lender collapsed under a pile of problem loans.

Lone Star unloaded a third of the bank in a public share listing at 430,000 yen per share in October 2005, making a seven-fold return on its acquisition in just four years.