Mitsubishi firms plan huge M&A fund

Trading house giant Mitsubishi Corp. and Mitsubishi UFJ Financial Group Inc., the nation's largest financial group, will set up one of Japan's biggest investment funds to finance mergers and acquisitions, the companies said.

According to the plan, the companies will create a fund management company by the end of April with 100 billion yen.

The buyout fund aims to take advantage of the lull in activity among foreign investment funds in Japan amid the deepening financial crisis triggered by the subprime mortgage meltdown in the United States, the companies said Thursday.

Mitsubishi Corp. will provide 49.5 percent of the capital while Bank of Tokyo-Mitsubishi UFJ and Mitsubishi UFJ Securities Co., subsidiaries of MUFG, will provide 45 percent and 4.5 percent, respectively.

The remaining 1 percent will be offered by the fund management company, whose capital of 1 billion yen will be equally financed by Mitsubishi Corp. and Mitsubishi UFJ Securities.

The new fund finances such deals as a company's takeover of another company's subsidiary or business section that is technologically competitive.

The fund will also handle buyout plans in which a company's management purchases its own shares from stockholders.

After the buyouts, the investment fund will support management of the invested company as a stable stockholder.

Returns will be gained through an initial public offering or the resale of the invested company.

For each deal, the investment fund plans to provide between 10 billion yen and 20 billion yen over about five years.(IHT/Asahi: March 29,2008)