Shinsei Bank’s IPO Will Make History… and Returns –

While Ripplewood Holdings was tight-lipped about its upcoming IPO-exit from Shinsei Bank Ltd., the first Japanese bank to go public after being bought and turned around by foreign investors, Japanese media outlets reported that the value of the bank’s outstanding shares will be six times the initial investment made by the firm’s consortium.

Shinsei reportedly set a price of 525 per share for its IPO scheduled for Feb. 19 on the Tokyo Stock Exchange. That figure marks the upper limit of its previously set price range of 450 to 525 per share. The bank will offer 476.3 million shares when it lists, about 35% of the 1,358 million outstanding common shares held by the consortium. Subcriptions will be accepted between Tuesday and Friday.

Morgan Stanley, Nikko-Citigroup and Nomura Holdings are the underwriters for the offering, the first by a Japanese bank in seven years.

“This is a big success for us,” said Jeff Hendren, a managing director with Ripplewood, about the IPO. His firm raised many eyebrows when it bought the failed Long-Term Credit Bank of Japan in June 2000 and promised a turnaround.

Japan is notoriously difficult to infiltrate for foreign private equity firms, but Hendren said there is little difference between the resistance that exists now in Japan and that which existed in the U.S. at the dawn of the leveraged buyout phenomenon in the 1980s.

“People are suspicious at first of outside investors in general,” he said. “Once they realized that we were not coming in to slash and burn the business, but rather to work with them, support it and help it grow back into profitability, they were much more welcoming.”

Ripplewood has now made several large investments in the Japanese market, including last year’s $2.2 billion acquisition of Japan Telecom Holdings’ fixed-line operations. Other firms have also entered the market, as more and more buyout pros are becoming convinced that cultural and financial reform is on the move in the second largest economy in the world.


Firm: Ripplewood Holdings

IPO Target: Shinsei Bank

Exchange: Tokyo Stock Exchange

Offering: 476.3 million shares

Price Range: 450 to 525

Offer Price: 525

Underwriters: Morgan Stanley, Nikko-Citigroup and Nomura