Pacific Alliance looks to privatize Secured Capital

The price offered per share for SCJ was set as JPY 86,000 ($1065), valuing the deal at JPY20.4 billion ($250 million).

The deal, conducted with the full support of SCJ’s management team, will delist the company from the Tokyo Stock Exchange upon the completion of a successful MBO, which is slated to close on December 10.

PAG is currently the largest shareholder in Secured Capital, with a c.42.8% stake, including convertible bonds, through its Pacific Alliance Asia Opportunities Fund. SCJ has formally accepted the offer, and has recommended to shareholders that they should participate .

SCJ’s incumbent management owns c.29.8% of the business through four different funds, involving Katsuya Takanashi (President and CEO), Jon-Paul Toppino (Director, and also President and Representative Director and CIO of associated company SCJ Investment Management Co.), and Jack S. Keese (MD). All have agreed to sell their shares. Combining PAG’s current holding with SCJ’s controlling stake yields in total 72.61% of the company, as of the launch date of the MBO. Upon completion, SCJ will be controlled by a new entity, Pacific Alliance Group Holding (PAGH), where Toppino will have 2.26%. Takanashi will also remain as a director of PAGH.

The tentative merger arose as PAG seeks to expand its investment activities in Japan. Earlier this year, Anthony Miller, Chief Executive of PAG Japan, said at Reuters Global Real Estate and Infrastructure Summit that the firm plans to raise as much as $500 million over the next year. One industry figure told AVCJ that the MBO came as no surprise and has long been expected in Japan, as PAG and SCJ have been working more and more closely together, formalizing a business alliance in March 2009. Miller and Jun Daikuhara, PAG MD, are also board members of SCJ, though without an equity stake.

Miller has a nominal stake in the acquisition vehicle, and will sit on the board of the combined entity, while continuing to be CEO of PAG’s Japan business. He will remain as a Director of SCJ KK and SCJ Investment Management.

Pacific Alliance Group manages total assets of $4 billion. SCJ, meanwhile, made a notable realty acquisition in December 2009 of the Pacific Century Place building in central Tokyo, said to one of the most valuable office buildings sold by Davinci Holdings, for JPY140 billion ($1.7 billion), when the seller was restructuring. 

Further reading

Secured Capital gets Pacific Century Place

• Real estate
• 16 Dec 2009

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• North Asia
• Funds