Goldman, Morgan bid for a stake in Daito
US investment banks Morgan Stanley and Lehman Brothers are among the bidders for a stake in Japanese house builder Daito Trust Construction.
By Agencies |
TOKYO: US investment banks Morgan Stanley and Lehman Brothers are among the bidders for a stake in Japanese house builder Daito Trust Construction, sources familiar with the deal said, in what could stack up to be one of the biggest buyouts ever in Japan. Goldman Sachs and investment firm Aetos Capital are also interested in acquiring Daito, the sources said, and the value of the deal could ultimately exceed $10 billion.
Daito’s founder and chairman, Katsumi Tada, is selling his roughly 30% stake in the company. The sale could lead to the company eventually being taken private by the winner of the auction. “Including a premium on the deal, this could be a double-digit-billion-dollar deal,” one of the sources said. If management is included, the deal could become Japan’s biggest management buyout.
International interest in Daito, which designs and constructs residential and office buildings, reflects the attraction of Japan’s real estate market. Land prices in Japan started to pick up last year for the first time in 16 years against a backdrop of an economic recovery. With interest rates in Japan near rock bottom, the low cost of funding has made Japanese assets attractive.
Trading in Daito shares was halted by the Tokyo Stock Exchange. Before trade was stopped, the shares had shot up 15.7% to 6,490 yen, giving it a market value of about 804 billion yen ($7.1 billion). Japanese investment bank Nomura Holdings is orchestrating the sale. Daito said in a statement it had not decided to become a privately held company.
The potential size of Daito will test the appetite of the Japanese leveraged finance market, as the bidders will seek help in raising capital for the acquisition.
The global credit crisis that started in US subprime housing has made Japanese leverage bankers pickier about the deals they back, but they still have ample funds for the right deal. “Banks and financial institutions became more cautious and started to curb loans to real estate investors, and this had some impact upon highly leveraged opportunistic funds,” real estate services firm CB Richard Ellis said in a report this week.
Daito’s founder and chairman, Katsumi Tada, is selling his roughly 30% stake in the company. The sale could lead to the company eventually being taken private by the winner of the auction. “Including a premium on the deal, this could be a double-digit-billion-dollar deal,” one of the sources said. If management is included, the deal could become Japan’s biggest management buyout.
International interest in Daito, which designs and constructs residential and office buildings, reflects the attraction of Japan’s real estate market. Land prices in Japan started to pick up last year for the first time in 16 years against a backdrop of an economic recovery. With interest rates in Japan near rock bottom, the low cost of funding has made Japanese assets attractive.
Trading in Daito shares was halted by the Tokyo Stock Exchange. Before trade was stopped, the shares had shot up 15.7% to 6,490 yen, giving it a market value of about 804 billion yen ($7.1 billion). Japanese investment bank Nomura Holdings is orchestrating the sale. Daito said in a statement it had not decided to become a privately held company.
The potential size of Daito will test the appetite of the Japanese leveraged finance market, as the bidders will seek help in raising capital for the acquisition.
The global credit crisis that started in US subprime housing has made Japanese leverage bankers pickier about the deals they back, but they still have ample funds for the right deal. “Banks and financial institutions became more cautious and started to curb loans to real estate investors, and this had some impact upon highly leveraged opportunistic funds,” real estate services firm CB Richard Ellis said in a report this week.
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However, the bulk of deals were unaffected and competition for good-quality properties remained strong, CB Richard Ellis added. Japan has witnessed several huge property deals so far this year, including Morgan Stanley’s acquisition of hotels from Japanese airline All Nippon Airways for $2.4 billion and Goldman and Aetos’s bid for property investor Simplex Investment Advisors for $1.4 billion.Download
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