Private Equity – Nomura targets repeat success in US

Nomura Securities has launched a group to invest in US buyouts in the $1 billion to $3 billion (euros 969 million to euros 2.9 billion) value range in the hope of replicating the success of its London-based principal investment operation in the US private equity market.

Although Nomura suffered heavy losses a year ago following a crash in the mortgage-backed securities market, its principal finance group, led by Guy Hands, has been highly profitable. The UK operation is perhaps best known for deals in the public house sector – Nomura is the UK’s largest pub owner – but Nomura has also completed deals including the acquisition of the Ministry of Defence’s married quarters housing stock and Angel Trains, the largest of the three privatised rolling stock operating companies. In all cases, the principal finance group has securitised the cash flow of the acquired businesses to pay off transaction debt.

The new US operation, the principal capital group, will reportedly be headed by Tom Capasse and Bob Young, who have worked together since setting up Merrill Lynch’s asset-backed securitisation unit more than ten years ago. Following a stint with Greenwich Capital Markets, the pair joined Nomura in late 1997.

Nomura says the new principal capital group will target mature, basic service, low-tech asset-intensive businesses’. The bank will use its own capital to fund deals by the US operation, the same strategy it has followed in the UK. However, sources close to the bank have suggested that Nomura is considering launching a third-party fund for US securitisation deals once the principal capital group has demonstrated its ability to perform.