Lone Star, an investor of distressed assets based in the US, won the right to purchase the Osaka Prefectural Urban Development Co, said sources who told Reuters. The same people who were knowledgeable with the transaction also said the US-based fund would be offering the sector company that is half-owned by the Osaka prefecture in Japan JPY78 billion or USD783 million.
The sources also added that Lone Star's bid won against peer Fortress Investment Group and Nankai Electric Railway Co, a railway company in Japan. Lone Star's price was a 16% premium from Osaka prefecture's target price of JPY67 billion. Reuters said the competition for the Japanese railway operator indicated a strong appetite for the government assets. Moreover, the exit, should Lone Star's bid push through, would be the first high-profile purchase of a Japanese asset by the US firm.
Lone Star's activity as a fund was seen at its most highest in the region following the country's asset bubble in the early 1990s. The Dallas-based fund had acquired distressed assets then including a bank, golf courses, and hotels. Lone Star was quick to turn the financial position of the businesses around and divested them immediately by private and public sales. For the sale of the sector company, however, Osaka prefecture had put in a stipulation requiring a potential buyer to retain the railway business for five years.
Osaka Prefectural, a company set up by the government of the Osak prefecture, is part of a partnership called OTK Group. The group oversees Osaka's commercial distribution center and the Senboku Rapid Railway. The railway's route is from Nakamozu Station on the Nankai Railway Kōya Line to Izumi-Chūō Station. The government of the Osak prefecture's sale of OTK was seen as its strategy to privatization. Osaka prefecture has a 49% interest in OTK, while Osaka Gas Co (9532.T), Kansai Electric Power Co (9503.T) and a group of Japanese banks owns 51%.
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