Osaka prefecture blocks Lone Star bid for Japan rail asset

The distress-focused GP was selected by a government committee as the preferred buyer last month after it offered to pay JPY78 billion ($760 million) for the asset, outbidding Fortress Investment Group and local railway firm Nankai Electric Railway which had offered JPY73.4 billion and JPY72 billion, respectively.

Despite the offer being 16% higher than the JPY67 billion target price set by the prefecture, 54 out of 104 prefectural assembly members voted against the Lone Star bid yesterday after local municipalities collected signatures in opposition to the sale from more than 1,000 local residents.

OPUD runs an express commuter line to the south of the city and a commercial trucking distribution center. The divestment is part of a privatization strategy by Osaka prefecture, which holds 49% of OPUD. The remaining 51% is owned by Osaka Gas Company, Kansai Electric Power and a group of Japanese banks including Resona Holdings. A timetable for resuming the auction was not set.

According to the Financial Times, opponents to the deal said rail passengers would be JPY500 million a year better off if Nankai were allowed to take over. There were also objections to the idea of a foreign investment in public infrastructure - similar objections were expressed by the Japanese public earlier this year, when Cerberus Capital Management sought to obtain control of railways group Seibu Holdings.

The deal would have marked the first high-profile Japan acquisition by the Dallas-based firm since the early 1990s when it was one of the most active GPs in the country after the asset bubble burst. However, this latest vote underscores the difficulties foreign private equity firms continue to face as they try to land high-profile deals on country.

Last year, KKR saw its efforts to acquire distressed chip maker Renesas thwarted when a domestic consortium led by the government-backed Innovation Network Corporation of Japan with a JPY150 billion offer for the company.

 

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• Topics
• North Asia
• Infrastructure
• Buyouts
• Japan
• Infrastructure
• Lone Star Funds