Private Equity Takes Shinsei Bank Stake

The 202.3 billion yen sale designed to help strengthen investment and retail banking operations will make the investor group Shinsei's top shareholder, the bank said.

The offer comes at a time when the Japanese bank's profits are under pressure from exposure to the crisis in U.S. subprime mortgage lending, as well as weak domestic business stemming from sluggish economic growth.

Shinsei Bank was created in 2000 when a consortium led by U.S. investment firm Ripplewood Holdings purchased the defunct Long-Term Credit Bank.

Tokyo-based Shinsei said four investment funds run by J. Christopher Flowers will buy 50 billion yen ($452.9 million) in new shares, to be issued by the Japanese bank in March.

Flowers is a member of Shinsei Bank's board and controls 10.4 percent of outstanding shares.

The investor group will also launch a tender offer from Nov. 22 to Jan. 10 for up to 22.7 percent of the bank's outstanding shares on the open market, excluding Shinsei's treasury stock.

It will spend up to 152.34 billion yen ($1.38 billion) in the tender offer, paying 425 yen ($3.85) for each of the 358.5 million shares.

Shinsei shares closed at 398 yen ($3.61), up 9.3 percent in morning trading on the Tokyo Stock Exchange.