Mizuho to buy Orico shares from Morgan and KKR: source

TOKYO (BestGrowthStock) – Japan’s Mizuho Financial Group (8411.T: ) will buy preferred shares in consumer credit firm Orient Corp (8585.T: ) from Morgan Stanley (MS.N: ) (Read more about the money market today. ) and Kohlberg Kravis Roberts (KKR.N: ) for about 30 billion yen ($368 million), a source familiar with the matter said on Thursday.

Orient issued preferred shares to a group of investors in 2007 to bolster its capital, with U.S. investment bank Morgan Stanley buying 35 billion yen worth and private equity firm KKR investing 20 billion yen.

Like other consumer finance firms in Japan, Orient has been hurt by regulations limiting the amount individuals can borrow and lowering the maximum interest rate. Orient’s revenues have shrunk by about a quarter over the past four years.

Mizuho, Japan’s second-largest bank by assets, raised its stake in Orient earlier this year to 27.2 percent by converting preferred shares.

Morgan Stanley and KKR were able to convert the preferred shares to common stock from November. By buying their holdings, Mizuho will be able to prevent a dilution to common share value and a drop-off in its voting rights.

Mizuho is also talks to buy the state-run Development Bank of Japan’s holding in Orico preferred shares, said the source, who was not authorized to discuss the matter publicly before an official announcement expected later on Thursday.

Shares of Orient were up 8.1 percent at 94 yen, while Mizuho fell 1.9 percent to 154 yen, dropping in step with other banking shares.

(Reporting by Taiga Uranaka and Tim Kelly; Editing by Nathan Layne)

Mizuho to buy Orico shares from Morgan and KKR: source