Private equity funds suffer a bad rap in some places -- Tokyo, for one. In Japan, more than in the U.S. or Europe, private equity fund managers are regarded as ruthless bottom fishers who don’t nurture a company’s long-term prospects but instead slash its workforce and sell its assets piecemeal to make a profit.
That, says Tim Collins, founder and chief executive of New Yorkbased Ripplewood Holdings, is why he decided to list his group’s Japanese holdings on the Brussels stock exchange in late March, using a newly created company called RHJ Holdings. “There was really only one reason for us to list, and that was to have a vehicle that allows us to do deals that would otherwise be unavailable to us in Japan,” says Collins, 48. The payoff, he believes, will be more valuable than the lucrative management fees that go along with private equity -- and worth the hassle of complying with onerous disclosure rules. “As a listed company we will be more trusted, and that will open up new opportunities for us,” says Collins.
Other investors seem to like the approach. RHJ shares are up 7 percent since Ripplewood, which has $10 billion under management, sold 37 percent of the company at E19.25 ($24.90) a share on March 25, giving the seven Japanese companies RHJ owns a value of E1.9 billion, compared with the E344.2 million Ripplewood invested in them.
In total, the deal raised E657 million, which is earmarked for further investment in Japan. Collins has pledged to lock up his own 9 percent stake in RHJ for five years.
RHJ’s current holdings range from a money-losing resort on the southern island of Kyushu to an auto-parts maker in Shizuoka that is still on the mend. But Collins, who’s best known for his purchase and subsequent listing of Japan’s formerly state-owned Shinsei Bank and the highly profitable sale of Japan Telecom last summer, says his specialty is investing in troubled businesses. “And all these [RHJ] companies have seen their real performance improve since we’ve taken them over,” he points out.
Besides, says the confident fixer-upper, “I’ve tied my own money up in RHJ for half a decade through the listing. What kind of moron would I be if it were a bucket of worms?”
