Advantage Partners LLC, a Japanese buyout firm that wholly owns Tokyo Star Bank Ltd., is in final talks with a syndicate of banks to sell its stake in the lender to the group, two sources said Monday.
The Tokyo-based private-equity fund is in talks with a group including Dallas-based Lone Star Funds, Shinsei Bank Ltd. and Aozora Bank Ltd., according to the sources, who spoke on condition of anonymity as the negotiations centered on Tokyo Star's turnaround plan are private.
Advantage in December 2007 agreed to buy Lone Star's 68 percent stake in Tokyo Star, which was bailed out by the government eight years earlier, gaining a niche in small-company lending in the capital. Tokyo Star delisted from the Tokyo Stock Exchange in 2008 after the acquisition.
James Seddon, spokesman at Shinsei, and Tsutomu Jinbo, spokesman for Aozora, declined comment. An official at Advantage Partners did likewise. Ed Trissel, a spokesman for Lone Star in New York, was unavailable for comment after normal business hours.
Lone Star and Shinsei are likely to be contenders to lead Tokyo Star's turnaround efforts, according to a report by a daily Sunday. The deal would allow the syndicate to advise on the bank's recovery, it said.
Advantage has been using dividend payments from Tokyo Star to pay interest on ¥107 billion in loans taken to pay for the acquisition, according to the report. The interest payment strategy will undermine the bank's financial position if continued, given Tokyo Star's eroding profitability, it said.
Advantage was founded in 1992 by former Bain & Co. executives Richard Folsom and Taisuke Sasanuma.