Gillian Tett on Shinsei IPO

Ok, this is the same topic but deserves a separate post because Gillian Tett wrote a book about the LTCB buyout and this is culmination of that cycle.

However, the biggest winners are the architects of the buy-out - Chris Flowers, a former Goldman Sachs banker who controls his own private equity vehicle, and Tim Collins, head of Ripplewood, a US buy-out group.

Under the original terms, about 20 per cent of the profits will be split between Ripplewood and Mr Flowers. At the listing price, they have about $1.2bn of unrealised gains, but considerably more at current prices. Last year, Mr Flowers bought an additional stake from one of the early backers, boosting his paper gains towards $1bn.

In Japan, which has an egalitarian ethos and has never felt comfortable with the Wall Street principle of high risk and reward, such winnings seem almost obscene.

The issue is even more emotive because the government spent about Y4,000bn ($36bn) of taxpayers' money to clean up the bank's balance sheet before the sale.

To be frank, whatever happens, I have little sympathy for bellyaching over this deal. Ripplewood gathered the investors, the Japanese government signed off on the debt buyback, and Ripplewood assumed the risk of rebuilding the bank during a decade-long recession.

Who got screwed? The Japanese people who have to pay down the debt of the failed LTCB loans.

FT.com / Shinsei investors clean-up [ft.com]