TPG loses out on Takefuji deal to J Trust

The private equity firm was reportedly considering making a much-needed investment in debt-ridden Takefuji last month, as the latest effort to prevent the firm from liquidating.

Takefjui was in need of capital after filing for bankruptcy last year, having struggled with JPY433 billion of outstanding debt. It was due to receive a JPY28.2 billion lifeline from Korean firm A&P Financial - which beat TPG, J Trust and Cerberus Capital Management to invest last July - but announced on Wednesday that is has called off this investment because of A&P's failure to meet Takefjui's deadline.

Without A&P's capital, the company faced liquidation. That is why the involvement of Japan's J Trust, which is backed by US investment bank Goldman Sachs, is so significant.

Previously the leading suitor after submitting a JPY31 billion bid, J-Trust actually dropped out of the running last April, giving A&P priority in the process. Its winning bid - lower than its original offer - will no doubt come as a surprise for many, who see the investment as a way for Takefuji to continue with its lending business and repay a portion of its debts.

J Trust plans to split Takefuji's business into two in March, with one entity responsible for repaying creditors and the other for the company's business operations.

Japanese lenders have struggled since 2006, when local regulators ruled that they had charged too much interest to their clients, many of whom are small businesses, and ordered them to repay borrowers. Indeed, A&P's delay in paying Takefuji has been attributed to sanctions by South Korean regulatory authorities over the charging of excessively high interest rates on loans in its home market.

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• Topics
• North Asia
• Buyouts
• Financials
• Financial Services
• Japan
• TPG Capital
• buyout