JIN-289 -- Slip Slidin' Away? Tokyo Star's IPO Opportunities

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T H E J @ P A N I N C N E W S L E T T E R

Commentary on the Week's Business, Technology and Cultural News
Issue No. 289
Friday, September 17, 2004

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@@ VIEWPOINT: Slip Slidin' Away? Tokyo Star's IPO Opportunities

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@@ VIEWPOINT: Slip Slidin' Away? Tokyo Star's IPO Opportunities

We've long kept an eye on Tokyo Star Bank. Recent reports that it is
moving closer to an IPO do not surprise us at all.

The rumors have been filling the airwaves for some time, and the
company's management has never made much secret of its plan to use
a market listing as the exit strategy for its investors.

We were first impressed by the bank last summer (2003), when it
appointed American Todd Budge to run the show and take on the grim
challenge of nursing a perilously ill bank back to a semblance
of good health. (See JIN #229:
As his own publicity machine endlessly pointed out, Budge was both
the youngest ever chief executive of a Japanese bank -- and the first
foreign CEO.

By all accounts, the likeable Budge has lived up to his PR billing.
Given the often tawdry Japanese banking industry, Budge has emerged
as a very sleek niche player, offering plenty of lessons to his

Tokyo Star, which is ultimately owned by the US private equity group
Lonestar Funds, is nothing like the basket case it once was. Budge has
kept the operation lean, and steered it towards the markets he thinks
will boom.

As one example of Budge's smarts, Tokyo Star has introduced a unique
mortgage product with lending practices specifically targeting young
Japanese looking to buy their first home. This, along with a small
selection of technological advantages over the rest of the industry,
gives Star improved prospects for a profitable future.

The only reservation we have, really, is whether Budge might have
missed the boat a bit.

The flotation of Shinsei Bank earlier this year went off with a lot
of fireworks. It was very clear then just how far a mass of
excitable private investors were pushing the price north.

Budge said at the time that he did not want Shinsei's flotation to
influence the timing of Star's. But it is becoming clearer almost
daily that the market is not quite as buoyant as it was back in
February -- and that Star will not get quite the price it might have
easily commanded seven months ago.

It is very likely Budge knows this, of course, and that his plan is
to simply bring Star to market at a reasonably conservative price,
letting the shares rise slowly as the market sees the bank's quality.

But if Lonestar is pushing him for the billions that Ripplewood made
from Shinsei, the opportunity is fast escaping.

-- The Editors

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Written and edited by Roland Kelts
and Leo Lewis (editors2@japaninc.com)


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