SBI Holdings Inc, a Japanese online financial behemoth, said on Wednesday that it is considering taking its publicly traded subsidiary Shinsei Bank Ltd private in order to refund $3 billion in public funds.’
A delisting would be a significant step for Shinsei, which has been unable to return public funds obtained by its predecessor bank two decades ago because its shares have underperformed during Japan’s years of low-interest rates.
“It’s an option worth pursuing,” Yoshitaka Kitao, SBI’s CEO, said at a press conference.
In a tender offer this month, the company effectively acquired control of Shinsei, a mid-sized lender.
Kitao stated that the organization has begun discussions about the prospect and intends to address it with the Financial Services Agency, the regulator.
He stated that he would consider a variety of options, including allowing Shinsei’s minority shareholders to exchange their stock for SBI stock.
With a market capitalization of approximately 500 billion yen, Shinsei Bank still owes the government 350 billion yen ($3.09 billion).
As a result, the government owns around 20% of Shinsei. Shinsei stock would have to rise to 7,450 yen in order to retrieve the entire amount owed by selling shares on the market. On Wednesday, its shares finished at 1,907 yen, up 5.9%.
According to Refinitiv, Shinsei shares have suffered since their initial public offering in 2004, with a total return of minus 74 percent.
After the private equity fund, JC Flowers & Co sold down its Shinsei ownership in 2019, SBI, the financial unit of SoftBank Group until the firm departed SoftBank in 2006, took a stake in the company.
After Shinsei’s predecessor bank went bankrupt in Japan’s late 1990s financial crisis, JC Flowers and buyout fund Ripplewood bought it.
As a result, it became the first Japanese lender to be owned by foreign investors, and the ensuing initial public offering netted JC Flowers and Ripplewood a significant profit.
