Buyout fund JIP submits bid for Toshiba without bank backing

By abbasanwarinfo Last updated Nov 8, 2022

A source with knowledge of the situation said that a Japanese investment fund has raised about $6.7 billion to buy out Toshiba. The fund has told the troubled conglomerate that the money came from more than 10 Japanese companies.

But Japan Industrial Partners didn’t meet Toshiba’s request to send a letter of loan commitments from major banks by Monday, a source said. This makes it unclear whether funds can be guaranteed for the takeover, which is estimated to cost about $2.2 trillion in total.

The source said that JIP, which is in charge of a group that Toshiba chose as the preferred bidder for the possible buyout, seems to be basing its estimate of the total cost on the share price since that number is the same as the company’s market capitalization.

Buyout fund JIP submits bid for Toshiba

The Nikkei newspaper said Tuesday that if Toshiba accepts JIP’s offer, it will try to get financing by the end of this month. Investors in the plan include Chubu Electric Power and the financial services group Orix.

In the 2010s, Toshiba had problems like a window-dressing scandal and a huge loss in U.S. nuclear power business that made it hard for the company to get back on its feet.

Sources say that JIP’s plan to let Toshiba’s current management stay on after a buyout worried some of Japan’s biggest banks, whose money is seen as important for financing the deal.

The Nikkei said that JIP, Chubu Electric, and Orix will each put in 100 billion, but it didn’t say where it got that information. It said that a number of overseas funds chose not to join the plan because they thought the returns would be low.

Investors could now turn their attention to the Japan Investment Corp., a state-backed fund that sources say is also preparing a bid. They said that the fund has been talking with U.S. private equity fund Bain Capital and North Asia fund MBK Partners about forming a separate group.

In the first round of bidding for Toshiba earlier this year, private equity firm JIP and state-backed JIC worked together. However, for the second round, they went their separate ways.

Sources say that the two companies had trouble getting along because of their different ideas about JIP’s plan to keep Toshiba’s management.

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