Hiroshima Fund Established (Nikkei)

Nov 22nd, 2003

The Hiroshima Bank and the Setouchi Bank under the Momiji Holdings, Inc. are setting up corporate recovery funds consecutively. By collaborating with a third party, they aim to raise the value of associated enterprises through delinquent loan disposals and non-performing department restructures. Capitalizing on funds from both domestic and international institutional investors, they hope to revitalize the regional economy.

The Hiroshima Bank will collaborate with a consulting firm, RISA Partners (Chiyoda-ku, Tokyo. President: Mr. Atsushi Imuta) to establish the “Hiroshima Corporate Recovery Fund” next month. The fund will invest in small and medium enterprises in Chugoku and Shikoku areas that the bank bases its business in.

The first initiative will invest towards a manufacturing business in Hiroshima and it is anticipated that the US Citigroup will participate in the investment. They will embark on the investment this year and through M&A and debt-equity conversions, they aim to raise the value of the business.

Funds will be established per each initiative and the total investment amount will be raised to 3 billion JPY. This fund will also invest towards businesses not previously affiliated with Hiroshima Bank. Since the bank’s delinquent debt disposal is not the main goal, loaning transfer fee will not be too high. Hiroshima Bank is also planning on establishing a larger corporate recovery fund for the region.

The fund will be managed by RISA Partners Inc. Its subsidiary company, IR Loan Servicing Inc. and Hiroshima Bank’s 100% subsidiary company, Shimanami Loan Servicing Inc. will provide the debt collection services.

The Setouchi Bank, Ltd. on the other hand, will ally with Value Capital Inc. (Hiroshima city, president, Mr. Nobuyuki Doi) to establish a fund this year upon selecting the investment subject. An audit corporation, Tohmatsu’s consulting firm will advise on corporate recovery. By collaborating with a local expertise, they aim to provide better support services.

Buying out of other debts for regional small and medium corporations from financial institutions other than Setouchi Bank is also being considered. Given a merger of Setouchi Bank and Hiroshima Sogo Bank next May, the entire Momiji Bank Ltd will continue to expand its alliances.