Done Deals – Olympus Launches Asian Joint Ventures –

Olympus Capital Holdings Asia in December entered into a joint venture with Tomen Corp., the Japanese trading and investment firm, to acquire a 50% stake in Tomen Mediacom, a consolidation of five cable television companies that cover 800,000 homes in the Tokyo metropolitan area.

Olympus and Tomen will invest up to $80 million to provide high speed broadband Internet access through Mediacom and assist the cable television companies in their expansion, management and operation. The cable holdings include City Telecom Kanagawa, City Cable Net, Sayama Cable Television, Mushashino-Mitaka Cable, and Yokohama Television.

Olympus Capital was established in 1997 and its founding investors include New York-based Ziff Brothers Investments. It is an independent direct investment firm in Asia, with offices in Hong Kong, Seoul, New York and elsewhere in the region.

Daniel Mintz, managing director at Olympus Capital, said that the deal came about through prior relationships with Tomen.

Mintz said the deal is significant because Japan has rapidly growing demand for the Internet, but accessing it through phone lines remains expensive for consumers. “This created an enormous opportunity for broadband access through cable lines as a more viable alternative,” he said. “[But] because of the structure of the Japanese cable business, it is hard to reach the consumers. This transaction is unusual in that we are one of the few foreign groups – strategic or financial – to be a part of that last mile reaching the consumers.”

Japan Wants to Log On

The attraction of Olympus Capital and other U.S. private equity groups to the Japanese Internet sector is a result of increased Internet usage, a boom in the Internet-enabled mobile phones and declining telecommunications charges. E.M. Warburg Pincus Investors Group & Co., and GE Capital Corp., are private equity groups reportedly exploring Internet-related investments in Japan.

In a separate transaction, Olympus Capital last month entered into a joint venture with Korea Exchange Bank Credit Services Co. (KEBCS), the credit card subsidiary of Korea Exchange Bank.

The $120 million transaction involves two phases of investments on the part of the Olympus Capital consortium, which includes Samsung Life Insurance, Central Development Investment Bank of Taiwan and other limited partners. The initial round of investment was $90 million with an optional second round of financing valued at approximately $30 million in two years.

“We have been very focused on the consumer sector for quite some time, and had hired a senior operating executive to pursue opportunities around the region,” Mintz said. “We determined that KEBCS was the right partner in the right country for a major commitment. KEBCS also has 4.5 million card-holders so we were able to start day one with a real critical mass.”

The joint venture follows a number of measures taken by the Korean government to deregulate the consumer finance industry and jumpstart the economy, including encouraging the use of credit cards by consumers. “The favorable environment for the credit card business generally in Korea, combined with our ability to bring in several senior expatriate executives from leading multinational financial institutions were very appealing to us,” Mintz said.

Mintz said that Olympus Capital would retain three seats on the company’s Board of Directors and a significant stake in the company.

He also said that Olympus Capital has agreed to another transaction in Japan but declined to give further details due to a confidentiality agreement. Mintz also confirmed Olympus Capital was in the process of raising another fund.

“On a risk-return basis, there is an opportunity to buy into scale companies at reasonable valuations with clear opportunities to create and realize value on a scale that we’ve never before seen in Asia,” said Mintz. “Compared to the U.S., these direct investment opportunities generally offer better valuations, more downside protection yet higher long- term growth.”

Olympus Capital Holdings’ previous investments in the Asian market include Hong Kong semiconductor packaging company ASAT Ltd., HDFC Bank in India and Tisco Finance Plc in Thailand.