Is this the WSJ article that everyone is talking about?:
interactive.wsj.com
You may need a subscription to the electronic WSJ to read the story. With that plug, I'll just post it here (We already knew all of this anyway <G>):
February 24, 2000
--------------------------------------------------------------------------------
Softbank Nears Deal on Nippon Credit;
Move May Transform Banking in Japan
By PHRED DVORAK and BILL SPINDLE
Staff Reporters of THE WALL STREET JOURNAL
TOKYO -- The king of Japan's Internet-age deal makers, Masayoshi Son, is sealing his biggest acquisition yet: one of Japan's oldest old-line banks.
An investor group led by Softbank Corp., a company controlled by Mr. Son, was on Thursday morning given negotiating rights to buy Nippon Credit Bank Ltd. from the Japanese government, which took over the troubled lender in 1998.
Under the plan, the Softbank-led group would pay $9 million for the common shares of NCB, then pour about $900 million in new capital into the bank, the Financial Reconstruction Commission said, while the government will buy preferred shares of NCB worth $2.16 billion.
With the purchase of one of Japan's largest banks, Mr. Son will complete the second transformation of his company through acquisitions in the past decade. That makes Mr. Son one of Japan's only true deal makers in the Western sense of strategically buying and selling businesses like Legos.
But if Mr. Son has his way, the wheeling and dealing in Japan is just beginning. Softbank's purchase of NCB would be the latest step in his drive to help overhaul the way corporate Japan obtains and uses financing.
"Japanese entrepreneurs have had almost no access to capital," Mr. Son told a throng Wednesday when his Nasdaq Japan stock-market joint venture with the Nasdaq Stock Market unveiled its requirements for listings. "Now not only will companies have access through banks but also through the capital markets."
Softbank, which Mr. Son founded in 1981, is spearheading Nasdaq's move into Japan, giving the country a second aggressive stock market aimed at growth companies. Softbank is turning itself into a one-company venture-capital industry, with plans to pour well over $1 billion into more than 1,500 young companies in Japan in the next few years. Mr. Son -- whose 38% stake in Softbank, valued at almost $60 billion, means he rapidly is approaching the wealth of Bill Gates, whose 15.3% Microsoft stake as of September is valued at $74.2 billion -- has shown he is willing to do almost anything to help his cause, including dressing up as a Samurai warrior recently for an audience that included Prime Minister Keizo Obuchi.
--------------------------------------------------------------------------------
Expanding Network
If a Softbank-led investor group succeeds in landing Nippon Credit Bank, the deal would add to Softbank's expanding web of finance holdings.
Softbank's Financial Network and Its Ownership Stakes*
Softbank Investment
(financial and capital management; venture capital) 100%
E*Advisor
(online financial planner) 67
E-Loan
(mortgages and loans) 60
E*Trade Japan K.K.
(securities broker) 58
Forexbank
(foreign exchange) 56
InsWeb Japan
(insurance marketplace) 55
E-NetCard
(credit cards, consumer loans) 49
Morningstar Japan
(mutual-fund rating information) 53.4
Web Lease
(leasing) n.a.
CyberCash
(online payment clearing) partial, n.a.
* Also Softbank Accounting, established April 1999
--------------------------------------------------------------------------------
Owning NCB would add the overhauling of Japan's bank-lending practices to Mr. Son's list of ambitions. Mr. Son's frustrations with Japanese banks have fueled talk that a Softbank-run NCB would base lending on business plans rather than collateral and connections, and push quickly toward Internet banking.
Mr. Son and his partners -- other investors in the group include casualty insurer Tokio Marine & Fire Insurance Co. and leasing company Orix Corp. -- will face a stiff challenge. The bank, which collapsed from dud loans extended largely during Japan's go-go economy of the late 1980s, has never operated in a deregulated financial environment, much less the fast-paced world of the Internet. So the potential for a culture clash is huge.
But Mr. Son's past deals show he has a knack for making waves in Japanese finance. Softbank's joint venture with Nasdaq to bring the exchange to Japan -- the market will launch in June -- helped spur the Tokyo Stock Exchange to start a similar exchange in December. Softbank's aggressive venture-capital financing efforts in Japan have unleashed a flood of such money now washing into Tokyo.
Softbank executives "think they can disintermediate the whole system of financing in Japan," says Todd Jorn, head of fixed-income sales in Tokyo at Lehman Brothers, which has a joint venture with Softbank to sell bonds over the Internet.
Taking control of NCB would accomplish two more-personal things for Mr. Son. He would complete a two-decade trek from the fringes of corporate Japan to its very center. Owning NCB also would provide a vindication -- albeit an unintended one -- for a man who has battled prejudice as a Japanese of Korean descent: NCB got its start as a financier for Japan's colonial push into Korea in the early 1900s.
All this is a remarkable turn of events for Mr. Son and Softbank, whose stock price only three years ago hovered around 2,000 yen ($18.04). Wednesday, its shares closed at 157,000 yen, giving the company a market capitalization of 17.26 trillion yen ($155.7 billion) -- roughly the size of Denmark's annual economic output. For that, Mr. Son can thank the Internet.
Mr. Son, who graduated from a U.S. high school and attended the University of California at Berkeley, started Softbank as a software distributor that also became a prominent publisher of computer-industry magazines. Early on, he exhibited an unusual knack for a Japanese businessman: the ability to secure loans based largely on his business plans.
By early 1995, Mr. Son was taking the advice of Yoshitaka Kitao, an ambitious young investment banker he had just hired from Nomura Securities Co. to be his chief financial officer: Pay back bank loans and go to the capital markets for the money -- not the sort of move that usually gets companies ahead in Japan.
Over the next three years, Mr. Son transformed Softbank into a global concern with acquisitions that included a premier computer-industry trade show, the Ziff-Davis Publishing collection of computer-industry magazines in the U.S. and Kingston Technology Corp., a U.S. memory-card maker. The purchases were financed by issuing debt, which grew tenfold to 225 billion yen.
Concerns about that debt sent Softbank shares plummeting in 1997, but by then Mr. Son had planted the seeds of his resurgence: early investments in about 80 U.S. Internet companies, including E*Trade Group Inc. and Yahoo! Inc. Ziff-Davis largely has been sold off. So has Kingston. What remains is one of the world's great bets on the Internet.
Softbank is positioning itself to help nurture an Internet-related entrepreneurial boom in Japan, where start-up companies traditionally haven't had easy access to capital markets.
With the Nasdaq joint venture, which will be established under the aegis of the Osaka Stock Exchange, Mr. Son has spurred the hopes of thousands of entrepreneurs. Mr. Son won over Nasdaq last year by personally cooking a meal of Japanese food for Frank Zarb, chairman of the National Association of Securities Dealers, which owns Nasdaq. Mr. Son then put on a multimedia presentation to persuade Mr. Zarb to open Nasdaq's first Asian market in Japan.
"To this day, I don't know what we ate," says Mr. Zarb. "But he convinced us we had to be in Japan."
Mr. Son's boyish enthusiasm has been known to win members of Japan's old guard, as well. Paradoxically, the farther Mr. Son peers into the future, the more he seems fascinated by the past. In recent years, he has taken to calling Softbank an Internet zaibatsu, a reference to the industrial conglomerates that ushered Japan into the modern era a century ago.
In the fall, he helped stage a tongue-in-cheek play about a Samurai reformer who lived a century ago -- but sounded suspiciously like a modern-day venture capitalist. Mr. Son, however, though cast in the lead role, arrived late from a business trip and could participate only in a discussion panel on venture capital that followed.
But the playbill for the evening, attended by business leaders and politicians including the prime minister, summed up his philosophy: "The times are calling us," it said. "Rise, Venture Samurai."
Write to Phred Dvorak at phred.dvorak@wsj.com and Bill Spindle at bill.spindle@wsj.com
|
