Mitsui Plans To Crack U.S. PE With GE Capital

The Japanese trading house Mitsui & Co. Ltd plans to enter the U.S. sponsor finance business through an arrangement with the big domestic lender GE Capital.

“U.S. sponsor-finance business is brand new for Mitsui to deploy its capital into, but this market looks attractive given its risk-return profile,” Maamichi Mannaka, the general manager of business development in Mitsui’s asset management unit, told Buyouts.

Mitsui announced the new arrangement in late July, describing its approach as co-investments alongside GE Capital’s own lending, initially to target private equity-sponsored loans. Mitsui will invest $200 million of its own capital in private equity-sponsored loans in the first year of the program, and it plans to raise money from Japanese institutional investors in the future.

Mitsui said it will focus initially on financing for original equipment manufacturers and renewable energy. Mannaka said, in written replies to questions sent by e-mail, that the company and GE Capital also will look at other opportunities globally as the partnership develops.

Under the terms of the agreement, GE Capital will source the loans and leases for Mitsui’s investment consideration and will service the accounts. Mannaka said Mitsui would focus on U.S. mid-market companies with EBITDA in the range of $15 million to $50 million. Mitsui’s typical exposure in a given deal is likely to be in the $10 million range.

As a Japanese trading company, Mitsui functions somewhat like a U.S. conglomerate, with interests that can span manufacturing to services businesses, as well as financial functions including import and export, risk management and lending. Mitsui & Co. (USA) Inc. operates mainly in six industries, according to its Web site: iron and steel products; energy and mineral resources; infrastructure; motor vehicles and construction machinery; chemicals; and food, consumer services and information technology. Mannaka said the company set up an investment management company, MBK Capital Management LLC, to develop and execute the projects involving it and GE Capital.

A spokesman for GE Capital said the company would not comment beyond the press release.