Re: Ripplewood Holdings (stems from Chi. Tribune on Enron)

["Charles Jannuzi" <jannuzi@xxxxxxxxxxxxxxxxxxxxxxxxx>]

Ripplewood Pt. 2

I would say that the difference this time is that most Japanese investments
in the US turned out very bad for them, while the private equity groups like
Carlyle and Ripplewood know how to make a buck. It's the same way GE Capital
makes money too. They aren't in Japan to re-tool the automobile industry.
The idea is buy up and keep what makes a lot of money and sell off the rest
in packages at prices far more than what the stuff cost during the
bankruptcy firesale.

 http://www.nightlybusiness.org/trnscrpt/2001/trnscrpt122601.htm#STORY3

12/26/01: Why US Businesses Are Bargain Hunting In Japan

 SUSIE GHARIB: During the S&L crisis in the US, investors all around the
world
 bought up American assets, paving the way for an eventual improvement in
the
 market. Now, history seems to be repeating itself in Japan. As Lucy Craft
explains in
 the first of a two-part series, Americans could now be the catalyst for a
turnaround
 in Japan's economy.

 LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT:
 Forty-five-year-old buyout specialist Timothy Collins professes an aversion
to the
 limelight, preferring a discreet low profile for himself and his New
York-based private
 equity firm. But in Japan, his Ripplewood Holdings is anything but obscure.
Collins is
 the most aggressive of a handful of foreign investors who are acquiring
bankrupt
 Japanese companies at fire-sale prices.

 ROBERT FELDMAN, ECONOMIST, MORGAN STANLEY: I think a lot of foreigners
 will be coming here looking for good deals. Whether it turns into a flood
depends in
 part on the ability of the Japanese to stand up to the plate and say, "no,
I want it
 first," which many of them may want to do. But I do expect foreigners to
come in and
 have a very active and constructive role in getting the Japanese economy
back on
 track.

 CRAFT: Ripplewood signed its first deal here in 1999, picking up this
prestigious but
 failed former industrial bank; a car parts company [Jannuzi's note here:
this helped Nissan report profits since they paid a huge chunk of cash for a
car parts division of Nissan that Ghosn and Renault figured they no longer
needed] , resort, and Japan's oldest recording company were added to
Ripplewood's portfolio this year. With a war chest of over $1 billion,
Collins is still shopping for bargains in the chemicals, hotels, and
 electronics fields. Other potential investors look at Japan and they say,
"this is a
 basket case." You look at it, when you're looking at the distressed assets
here what
 do you see?

 TIMOTHY COLLINS, FOUNDER & CEO, RIPPLEWOOD HOLDINGS: Well, we don't  really
look at distressed assets. We look industry by industry, and what we see is
a  country that's got the most powerful industrial infrastructure in the
world. It's got fabulous engineers, great technology, and a hangover from a
disastrous bubble in
 the financial system, frankly not unlike - although elongated and
exacerbated by the
 long length of time - not unlike some of the problems that the US is facing
today. So
 when we look at investments, we fundamentally first on the industry and
second on
 the competitive position of the underlying enterprises. And what happens on
a
 macroeconomic basis is often a lot less relevant.

 CRAFT: But while fans call Ripplewood visionary, detractors call the firm a
vulture.
 Hostile popular reaction to Ripplewood's headline-generating acquisitions
has been
 reminiscent of anti-Japanese hysteria in the US, when Japanese snapped up
 Rockefeller Center and other trophy properties in the 1980s.

 EDWIN MERNER, PRESIDENT, ATLANTIS INVESTMENT RESEARCH
 CORPORATION: People are worried that they're asset strippers. So more or
less
 they're going to come in, they're going to then sell off the pieces at a
higher price
 than the parts are worth as a group, and then they're just going to pack
their bags,
 put their money in their bags, and leave. I think that's the fear, that
they're not really
 serious long- term players; they're just guys who want to make quick buck
and be on
 their way.

 CRAFT: Collins, who has specialized in turnarounds for over 10 years in the
US,
 calls such charges unfounded. And admirers say his strategy of scouring
Japan for
 gems in the rough, competitive but debt- saddled companies, is sound.

 FELDMAN: I think he's perfectly right about that. I did a calculation once
based on a
 sample of about 2,500 companies. A quarter of the companies, interestingly
 enough, have poor return on assets but also very low leverage. And that's a
group
 of companies, a quarter of this entire sample, where if you can just get
some
 management focused on raising the return on assets, then they could bloom
into
 very, very good companies. So I think Tim is entirely right about that.
Lucy Craft,
 "NIGHTLY BUSINESS REPORT," Tokyo.

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Posted by Charles Jannuzi