TOKYO, Dec 22 (Reuters) - The chief executive of Japanese
online financial conglomerate SBI Holdings Inc said on
Wednesday it is exploring the possibility of taking its listed
subsidiary Shinsei Bank Ltd private to return $3
billion in public funds.
A delisting would be a key milestone for Shinsei, which has
been unable to repay the public money its predecessor bank
received two decades ago as its shares have long underperformed
over years of low interest rates in Japan.
"It's an option worth pursuing," SBI's chief executive,
Yoshitaka Kitao, told a news conference.
The group took effective control of mid-size lender Shinsei
in a tender offer this month.
Kitao said the group has begun the talks on the possibility
and planned to discuss it with the regulator, the Financial
He said he would consider a range of possibilities including
allowing Shinsei's minority investors to swap their shares for
Shinsei Bank, with a market capitalisation of nearly 500
billion yen, still owes the government 350 billion yen ($3.09
billion) in public money.
As a result, the government still owns about 20% of Shinsei.
In order for it to recoup the full amount lent by selling shares
on the market, Shinsei stock would need to go up to 7,450 yen.
Its shares closed up 5.9% at 1,907 yen on Wednesday.
Shinsei shares have struggled since its initial public
offering in 2004, giving a total return of minus 74%, according
SBI, the financial unit of SoftBank Group until the firm
left SoftBank in 2006, first took a stake in Shinsei after
private equity investor JC Flowers & Co sold down its holding in
JC Flowers, together with buyout fund Ripplewood, bought
Shinsei's predecessor bank after it went bankrupt in Japan's
late 1990s banking crisis.
That made it the first Japanese lender to be owned by
foreign investors and the subsequent initial public offering
generated a huge profit for JC Flowers and Ripplewood.
($1 = 114.0900 yen)
(Reporting by Makiko Yamazaki; Editing by Tom Hogue and Kenneth