Mizuho Financial Group plans to increase its ownership in consumer credit firm Orient Corp., buying 30 billion yen ($368 million) worth of shares from investors Morgan Stanley and Kohlberg Kravis Roberts & Co., Reuters reported. Morgan Stanley bought 35 billion yen worth of Orient Corp. in 2007, at the same time buyout shop KKR invested 20 billion yen in the company. Mizuho, Japan’s second-largest bank by assets, already owns 27.2% of Orient. It now plans to buy 19.7 million additional shares from KKR and 30.6 million shares from Morgan Stanley, Reuters reported.
(Reuters) – Japan’s Mizuho Financial Group said on Thursday it would buy preferred shares in consumer credit firm Orient Corp from Morgan Stanley and Kohlberg Kravis Roberts for 30 billion yen ($368 million).
Orient issued preferred shares to a group of investors in 2007 to bolster its capital, with U.S. investment bank Morgan Stanley buying 35 billion yen worth and private equity firm KKR investing 20 billion yen.
Mizuho said in a statement it would buy 19.7 million shares from KKR and 30.6 million shares from Morgan Stanley.
Like other consumer finance firms in Japan, Orient has been hurt by regulations limiting the amount individuals can borrow and lowering the maximum interest rate. Orient’s revenues have shrunk by about a quarter over the past four years.
Mizuho, Japan’s second-largest bank by assets, raised its stake in Orient earlier this year to 27.2 percent by converting preferred shares.
Morgan Stanley and KKR were able to convert the preferred shares to common stock from November. By buying their holdings, Mizuho will be able to prevent a dilution to common share value and a drop-off in its voting rights.
Mizuho is also in talks to buy the state-run Development Bank of Japan’s preferred shares in the consumer finance company, said a source familiar with the matter, who was not authorised to discuss the matter publicly.
Shares of Orient closed up 9.2 percent at 95 yen. Mizuho fell 2.6 percent to 153 yen, in step with other banking shares. (Reporting by Taiga Uranaka and Tim Kelly; Editing by Chris Gallagher)