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Report: KKR, Morgan Stanley sell Orient shares

Mizuho Financial Group is reportedly paying ¥30bn to the US firms for a combined portion of their holdings. The sale marks a partial exit for KKR from its first Japanese investment.

Global private equity firm Kohlberg Kravis Robert and Morgan Stanley are reportedly selling ¥30 billion (€275.1 million; $366.8 million) of preferred shares of Japanese consumer credit firm Orient Corporation to Mizuho Financial Group.

KKR did not respond to requests for comment, while other parties could not be reached by press time.

According to Reuters, Mizuho is buying 19.7 million Orient shares from KKR and 30.6 million shares from Morgan Stanley. It is unclear how many shares KKR and Morgan Stanley will still own in the company after the sale.

In April 2007, KKR invested ¥20 billion in convertible preferred stock of Orient, marking the firm’s first deal in Japan. The share sale, which was part of Orient’s effort to bolster its capital, also saw Morgan Stanley buy ¥35 billion worth of its preferred stock, according to the Reuters report. Orient issued ¥290 billion worth of preferred shares at the time.

The stock has been convertible since November 2010. By buying KKR’s and Morgan Stanley’s shares, Mizuho is aiming to prevent a dilution of the common share value, according to Reuters. Earlier last year, Mizuho raised its stake in Orient to 27.2 percent by converting preferred shares.

After almost five years in the country, things seem to be picking up for KKR in Japan. In June last year, the firm secured its second deal and first buyout transaction there since opening a Tokyo office in May 2006. The firm paid ¥32 billion for Intelligence, the recruitment services unit of Japanese media content provider Usen Corp, outbidding other private equity giants such as The Carlyle Group and Advantage Partners.