The UFJ group, the nation’s fourth-largest lender, will team up with financial services company Orix Corp., trading company Marubeni Corp. and others to set up a fund aimed at turning around small and medium-size firms, UFJ officials said Thursday.
This fund will be worth between 20 billion yen and 30 billion yen.
Orix, Marubeni and Nichimen Corp. will each invest 2 billion yen to establish Synergy Capital by the end of the month, with UFJ Bank and UFJ Tsubasa Securities Co. providing a further 2 billion yen between them.
Synergy Capital will then approach domestic and international investors to raise the remainder of the cash.
The fund will acquire shares in ailing companies and provide advice via experts in the same industry.
Meanwhile, the UFJ group will provide restructuring funds to companies in the form of loans.
Troubled UFJ Bank borrowers with annual sales of between 10 billion yen and 30 billion yen are expected to be among the fund’s first targets in April. The fund’s creation will be a testing ground for new tax measures on smaller firms slated to pass through the Diet this month.
Under the proposed revisions to the Industrial Rehabilitation Law, tax exemptions will be given to corporate rehabilitation funds that invest in listed companies.
Bankruptcies among small and midsize companies continue at a feverish pace, transforming good borrowers into bad.
These failures are threatening to undo banks’ struggles to clean up their problem loans. Small and medium-size companies make up around 70 percent of UFJ Holdings Inc.’s loan portfolio.
“Many smaller firms have stable earnings but have been unable to deal with excessive equipment or land, and are suffocating in debt,” said UFJ Holdings spokesman Kazuhiro Yamanaka. “If we can help these companies regain financial health quickly, that’s good for us as well.”
The fund aims to draw on business consulting firms such as Braxton Ltd. for accounting and restructuring advice, while Marubeni will provide marketing advice and secure sales routes to cut distribution costs.
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