Advantage Partners buys Livedoor’s financial businesses

Advantage Partners, a Tokyo-based private equity firm raising its fourth fund, has agreed to buy the financial business of Japan’s fallen internet giant Livedoor.

Advantage Partners, a Tokyo-based private equity firm founded by former Bain consultants, is acquiring the financial services businesses of Livedoor Co, the internet business founded by Takafumi Horie.

Accusations of falsifying earnings force Horie to sell

Richard Folsom, a partner at Advantage Partners confirmed the acquisition in an email.

However, Folsom declined to comment on the fund the firm is close to holding a first close on. According to a keen investor, the newest fund by Advantage Partners will be more than three times larger than its previous ¥46.5 billion fund.

The latest transaction by Advantage Partners worth ¥17.5 billion ($151million; €115 million) involves the acquisition of six subsidiaries spanning businesses in securities, consumer loans and credit cards, according to a spokesman from Livedoor.

The financial businesses, which contribute 70 to 80 percent toward Livedoor Co’s total earnings, had to be sold, he added.

The sale represents a safeguard for the continuity of the business. Its parent company Livedoor Co has been indicted, along with the company’s former executives on charge of falsifying its earnings to inflate share prices.

The decision to sell the business to private equity was made in a meeting of the board of directors last week. 

Livedoor has been looking for a buyer to acquire its financial businesses because if the company itself is found guilty of fraud, it will be required to reduce its stake in Livedoor Securities Co., one of the six subsidiaries, to less than 20 percent under the Securities Exchange Law, according to Japan’s Kyodo news agency.

Livedoor evolved from an internet start-up, founded in 1995 by then 23-year old Horie, to a diversified business group after pursuing an aggressive mergers and acquisitions strategy.  Livedoor also has a large base of foreign shareholders.