By Junko Fujita
TOKYO, June 28 U.S. private equity firm TPG is
interested in investing in Japanese conglomerate Seibu Holdings
by either buying a stake from top shareholder Cerberus Capital
Management or by acquiring new shares, people with
knowledge of the matter said.
TPG sees potential value in Seibu's businesses, which
include its Prince Hotel chain in Japan, and approached Seibu
management earlier this year through an intermediary, according
to the sources, who asked not to be named.
The contact took place before Cerberus launched an
unsolicited bid to boost its stake in Seibu in March, the
sources said. TPG would only make the offer if Seibu management
agreed to its involvement, they added.
TPG declined to comment.
Seibu said this week it wanted to push ahead with what is
expected to be a multi-billion relisting on the Tokyo stock
exchange as soon as possible after blocking a bid by Cerberus to
shake up management.
The emergence of another financial investor in the embattled
Japanese property and railways firm could complicate efforts by
Cerberus to shake up the management of Seibu, where it remains
the largest single investor with a stake of 35.48 percent.
A spokesman for Cerberus said the private equity firm has no
intention of selling its stake to a third party.
Seibu said in a statement that it was not planning to issue
new shares and was not in a position to comment on the potential
of a sale by Cerberus of its shares. A spokesman for the company
said there had been no meeting between the two sides to discuss
a potential investment.
It was not immediately clear whether the offer could proceed
without the backing of Cerberus, which has a large enough stake
to veto shareholder resolutions.
The issuance of new shares to TPG would also dilute the
holdings of other investors, including state-backed lender
Development Bank of Japan and Norinchukin Bank, the central bank
for Japan's agriculture, forestry and fisheries cooperatives.
TPG, founded in 1992, is one of the largest private equity
firms with $56.7 billion of capital under management.
Its global investments range from financial institutions,
healthcare and medical companies to airlines and chipmakers.
TPG's other holdings in Japan include top toy maker Takara Tomy,
where it holds a 4.7 percent stake.
TPG in the past has offered to inject up to roughly $1
billion in both Olympus Corp, a medical equipment maker
which sought outside capital to survive after an accounting
scandal, and Japan Airlines Co. Neither offer resulted
in a deal.
In a frantic week at Seibu, shareholders voted down
Cerberus's bold bid to secure 9 of 15 seats on Seibu's board,
the latest in a raft public spats at Seibu.
The standoff between Cerberus and Seibu has been cast as a
test of Japan's receptivity to foreign capital as popular Prime
Minister Shinzo Abe promises to deregulate the economy to stoke
Ceberus has demanded Seibu improve governance and earnings
performance to ensure it gets a fair value for its shares when
it is relisted.
Cerberus in March launched an unsolicited bid to boost its
stake in Seibu from 32.4 percent to 44.7 percent to exert
additional leverage over Seibu management. It was only allowed
to increase its stake to 35.48 percent.
Still, the expanded holding is a big enough to allow
Cerberus to veto decisions at future shareholder meetings.
Cerberus first invested in Seibu in 2006 and helped the
company rebuild after it was delisted from the Tokyo Stock
exchange for falsifying financial reports.
A number of individual investors in Seibu rallied to
management's defence at this week's meeting, saying the U.S.
fund could shut down Seibu's unprofitable local rail lines
outside Tokyo or sell the company's Seibu Lions baseball team to
increase its returns despite local opposition.