Global private equity investment firm TPG announced that it has completed its investment of approximately 31 billion yen (USD 288 million) in Japan's non-bank financial firm NIS Group Co., Ltd. and in Nissin Leasing (China) Co., Ltd.
The investment was approved at the extraordinary shareholders meeting of NIS on Monday, February 18, 2008. After the investment, TPG owns approximately 40% of the shares of NIS and 87,500 warrants which, upon exercise, are convertible into 3.4% of the shares of NIS, and indirectly owns 50% of Nissin Leasing (China).
TPG is a leading private equity firm in the global market with a strong reputation for its successful investment in financial institutions worldwide. TPG has long appreciated the unique strength, the franchise, the market position and the management of NIS and had expressed its interest in investing in NIS as early as 2006. NIS has also recognized the vision, operating expertise and experience of TPG and the strategic value TPG will bring to NIS. TPG and NIS are confident that under the leadership of the new board and with a strengthened capital base, NIS will be better able to take advantage of the opportunities arising from today's tight credit market conditions and to achieve profitable growth.
Asked why TPG has decided to make this investment at a time when many investors have shifted away from the financial sector worldwide, Jun Tsusaka, managing director and representative of TPG Japan, said: "Whereas many leading financial institutions experienced large write-offs, losses and sharp deterioration in their asset quality, NIS stands out to a discerning and astute investor because its fundamental strength and asset quality remain strong. The history of investing in the financial sector tells us that best investments are made under the current market conditions if we pick the right target and if we are able to help it with our operating expertise and capital. NIS serves a real market need and is best positioned to do so."
Masayuki Yasuoka, managing director and representative of TPG Japan, added: "TPG's view is strongly endorsed by the funding partners of NIS, all of which recognize the ability of NIS to build good quality assets and manage its credit risks. With our investment, NIS will have a strengthened capital base, a very clean book, good quality assets and a profitable operation, which make it attractive to funding sources. We will work closely with NIS' funding partners so that the success of NIS will also contribute to their own."
NIS will continue to build on the early mover advantage of Nissin Leasing (China) to support its rapid and profitable growth. TPG has had a long history in investing and is the only foreign investor to control a nationwide bank in China, Shenzhen Development Bank. Mary Ma, a partner of TPG, said: "It is rare for a foreign controlled financial institution to build such a strong platform of growth in China. Nissin Leasing fulfills the need for small and medium sized Chinese companies to obtain financing in a most efficient manner. It is experiencing rapid growth as its customer base does. We are confident that Nissin Leasing will become an even stronger market leader after our investment as we will build a better infrastructure and process for it to scale up quickly."
TPG is one of the world's largest private investment firms with investments in global companies across a range of industries, as well as broad capabilities of managing these portfolio firms including such household names as Neiman Marcus, Bally Shoes, Burger King, Ducati Motorcycles, Metro Goldwyn Mayer (MGM) and Lenovo Computers, in addition to financial institutions in Asia and America. In Japan, TPG took a stake in the country's No.2 toy maker TOMY in March 2007 and is expanding its footprint. TPG now has an extensive global network of companies, with its portfolio firms having combined revenues of approximately $114 billion and about 550,000 employees.
NIS listed on the 1st section of the Tokyo Stock Exchange (TSE) in 1999, and listed on the New York Stock Exchange (NYSE) in 2002. Since its establishment in 1960, NIS has had the flexibility to change its business model to tailor its financial services that meet the social needs of the time. After selling most of its unguaranteed consumer loan receivables in 2004, NIS has shifted its business model to provide integrated financial services that address the diverse needs of SMEs. NIS is a competitive non-bank financial services provider that can respond to the various needs of SMEs through its cooperation with non-financial companies and its subsidiaries, both of which have a variety of expertise. NIS had diversified into growth areas such as real estate finance and investments, non-performing loan servicing and leasing services in China.