VS Vulture Fund　ROUND1

Chapter 56

Japanese conglomerate groups are composed of loose corporate alliances centered on cross-shareholdings.

Although zaibatsu-affiliated companies can be led by core or holding companies, the recent dissolution of smaller zaibatsus has led these companies to boom quietly as a means of self-preservation.

I was reviewing documents in the living room of my mansion.

"Tori Kaze Kai. It's quite a Monkier."

The Keika-in Group was evolving from its origins as a mid-sized zaibatsu centered on Keika-in Pharmaceuticals into a conglomerate including the Far Eastern Group, Teisei Department Store Group, Keika-in Bank, Keika-in Securities, and Akamatsu Trading, among others.

With such growth, the challenge became controlling other companies by the central company. The solution was a collective leadership system through a presidential meeting.

Since calling it a mere presidential meeting was uninteresting, it was given an elegant name. The origin of "Tori Kaze Kai" that the Keika-in Group is trying to create comes from the phrase "kachoufugetsu" (flowers, birds, wind, moon), taking "tori" (bird) and "kaze" (wind) to form "Tori Kaze Kai."

"With this size, Keika-in Pharmaceuticals alone can't lead anymore. So, which companies are participating in this presidential meeting?"

Tachibana swiftly answered.

"Keika-in Pharmaceuticals, Keika-in Chemical Industries, Keika-in Bank and Keika-in Securities, Keika-in Hotel, Teisei Department Store, and Akamatsu Trading, which will merge in autumn. Along with the presidential meeting, there are plans for mutual stockholding and reorganization."

Using mutual stockholding for group governance isn't a bad strategy, but rapid expansion had distorted the current Keika-in Group's structure.

Keika-in Hotel of the former Far Eastern group received resorts from the former Hokkaido Development Bank and was planning a merger with Triple Ocean Hotel, owned by the Teisei Department Store Group, reducing the shareholding ratios held by Keika-in Pharmaceuticals and Keika-in Chemical Industries.

Keika-in Securities, Teisei Department Store, and Akamatsu Trading, set to merge in autumn, were undergoing capital reductions to manage losses from separating non-performing loans, and were being capitalized by Keika-in Bank.

Keika-in Bank, central to all this, was dealing with non-performing loan processing covered by a special loan from the Bank of Japan, making the Ministry of Finance highly influential in its inner circle. With the Ministry of Finance currently incapacitated by scandals, it was necessary to secure management rights within the Keika-in Group.

"So, the plan is to use the Moonlight Fund to buy these shares for mutual stockholding?"

"Yes."

Tachibana nodded.

The assets of the Moonlight Fund, which I controlled, had grown to several hundred billion yen by riding the IT bubble.

The plan was to use these assets as collateral to borrow funds from Keika-in Bank, buy Keika-in Bank shares, and complete the mutual stockholding.

The Moonlight Fund, based in the United States, was used to avoid treating it as part of Keika-in Bank.

"...The current recession in Japan began because zaibatsu management and those wanting to escape from it are trying to mask it under the guise of groups! For Japan's revitalization, we must never allow this! We must free the Japanese economy from the zaibatsu and revitalize it through structural reforms..."

Criticism from opposition members on an economic program on TV was concentrated on Keika-in Bank, which appeared to be profiteering while using the Bank of Japan's special loans.

I turned off the TV and tilted my head.

"And that is what?"

"It seems to be mere jealousy."

Tachibana answered curtly.

These criticisms came just as we were about to start reorganization of the group.

Accompanying this, economic programs on TV and weekly magazines were erupting in criticism, calling for the dissolution of zaibatsu and the elimination of mutual stockholdings within groups.

"There must be a mastermind behind this."

I declared, knowing from a past life.

"A vulture fund. Certainly, it must be tasty to them."

In Japan, a fund that buys bankrupt companies, sells their assets, or rehabilitates companies to relist or sell for profit is generally called a vulture fund.

For Japanese companies struggling with non-performing loans, this was the perfect time for vulture funds' shopping spree.

However, since financial institutions were holding up better than in my past life, it was harder for them to intervene, but the scandals of the Ministry of Finance had made Keika-in Bank look vulnerable.

"I need confirmation. Please get me the stock price and names of the shareholders of Keika-in Bank."

"Due to the merger and capital reduction, Keika-in Bank is currently delisted. The Ministry of Finance essentially holds most of the shares. Their goal is likely to acquire these shares."

The Bank of Japan's special loan to Keika-in Bank was unsecured and unlimited but had to be repaid.

The best way to repay was to sell Keika-in Bank shares.

If more than half were allocated to various Keika-in Group companies before public offering, and the rest were sold after listing, repayment of the special loan could be anticipated.

They intended to snatch it away.

Acquiring Keika-in Bank would grant access to a treasure trove, whether selling off the Teisei Department Store Group, Keika-in Securities, Akamatsu Trading, or restructuring them.

"This will go to auction."

Before the upcoming House of Councillors election, the ruling party, seeking to raise its approval ratings, turned the Keika-in Bank issue into a political matter.

As a result, the issue of acquiring Keika-in Bank shares, which was supposed to be settled internally, would likely proceed as a public auction for fairness.

As I was deep in thought, there was a knock at the door, and one of the maids whispered something to Tachibana.

"Ojou-sama, you have a guest."

"There shouldn't be any scheduled visitors today. Who is this uncouth person?"

I asked with a scowl, and Tachibana handed me a business card given by the maid.

Under a lengthy title in katakana, a name was written.

"Pacific Global Investment Fund.

Far East Regional Fund Manager. 

Angela Sullivan, she says."

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Glossary

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【Triple Ocean Hotel】

was bought for 288 billion yen and sold for 365.4 billion yen. 

There seem to be various people interested in buying it.

【Capital Reduction】

There are advantages such as covering accumulated losses and tax benefits. The disadvantage is that in times like this, a 100% capital reduction (meaning the current shares become worthless) is the norm, holding shareholders accountable.

A 100% capital reduction followed by a capital increase is typically a single package.

【Vulture Fund】

Originally meaning non-performing loan funds, but with the influx of foreign funds, in Japan, it got mixed up with corporate rehabilitation funds and corporate acquisition funds. At one time, even the general public associated vulture funds with foreign funds.