G.P. Ripplewood Joins Marriott on Japan Hotel Venture –

Hot on the heels of Ripplewood Holdings LLC’s acquisition of the Long-Term Credit Bank of Japan, the firm agreed March 7 to create a joint investment fund worth Yen 400 billion ($3.71 billion) with Marriott International Inc. to buy hotels in Japan. Ripplewood will contribute 80.1% of the capital from its $1 billion RHJ Industrial Partners Fund. Marriott will contribute the remaining 19.9%.

RHJ Industrial Partners Inc. is the private equity arm of Ripplewood, located in Tokyo, which manages the Japan fund. The RHJ Industrial Partners Fund is expected to close in April. Its investors include: Mitsubishi Corp., Sumitomo Life Assurance, Tokio Marine & Fire Insurance Co., Nikko Securities Co., Deutsche Bank, Citigroup Inc. and GE Capital Corp. Merrill Lynch & Co, another investor, is acting as the fund’s placement agent.

A source close to the deal said Marriott and Ripplewood will bring in other strategic investors as well.

The Ripplewood-Marriott effort will mark the first major investment by a foreign firm in the Japanese hotel industry, which has been in the financial doldrums since the 1980s. The hotels in Japan, now undermanaged, will be repositioned under Marriott’s management with modernized facilities, computerized reservations systems and competitive marketing. Most of the hotels will carry one of Marriott’s six brand names that include Renaissance Hotels, Residence Inn and Courtyard Hotels. Marriott currently has ten hotels in Japan. Ripplewood will manage the acquisitions and Marriott will direct the hotel renovations.

Ripplewood is considering a number of other industries for investment in Japan including chemicals, automotive, telecom equipment and some specialty retail segments.