Orix Said to Weigh Bid for StanChart’s Hong Kong Credit Unit

Apr 14, 2014 3:21 am ET

(Updates shares in the sixth paragraph.)

April 14 (Bloomberg) -- Orix Corp., Japan’s most acquisitive financial firm, is considering bidding for Standard Chartered Plc’s consumer credit unit in Hong Kong, two people with knowledge of the matter said.

Orix may seek to team up with another investor to buy PrimeCredit Ltd., said one of the people, asking not to be identified because the information is private. London-based Standard Chartered wants to sell the unit for about $700 million, almost three times book value, and plans to compile a shortlist of potential bidders this month, another person said.

Standard Chartered Chief Executive Officer Peter Sands said last month that he may sell the unit, as the U.K. bank cuts costs and pares operations where it doesn’t have sufficient scale. Buying PrimeCredit would help Tokyo-based Orix, whose businesses include leasing, lending and real estate, expand abroad as a shrinking population limits the domestic growth potential of Japanese companies.

Atsushi Horii, a spokesman for Orix in Tokyo, declined to comment on whether the company is interested in buying PrimeCredit.

“The bank is exploring strategic options for the consumer finance business,” Standard Chartered’s Hong Kong-based spokeswoman Gabriel Kwan said in an e-mailed statement today. “We are in the process to determine a course of action and we would stress that no formal decision has been made.”

Shares Fall

Shares of Orix fell 1.2 percent to 1,346 yen at the close of trading in Tokyo today, extending this year’s drop to 27 percent. The benchmark Topix index slipped 0.1 percent and is down 13 percent in 2014. Standard Chartered rose 0.3 percent to 1,326 pence at 8:18 a.m. in London.

Net income at PrimeCredit totaled about HK$520 million ($67 million) last year, one of the people said. That compares with profit of HK$480.9 million in 2012, according to company statements.

Standard Chartered said in January that it’s merging its consumer and corporate-banking operations to trim costs and Sands in November said the lender will review its businesses to cut back or withdraw from less profitable markets. The bank’s full-year profit fell for the first time in a decade in 2013.

Orix has announced more than 20 investments in companies over the past two years, the most of any Japanese financial institution, according to data compiled by Bloomberg. It bought Dutch bank Rabobank Groep’s Robeco Groep NV asset-management unit for 1.9 billion euros ($2.6 billion) last year, its largest takeover.

The Japanese firm also owns a stake in Hong Kong-based United Asia Finance Ltd., a consumer-finance arm of Sun Hung Kai & Co.

Orix said last month that it’s in talks to buy Hartford Financial Services Group Inc.’s Japan operations. The Connecticut-based insurer and Orix are close to a deal, two people with knowledge of their talks said in March.

--With assistance from Sanat Vallikappen in Singapore and Takako Taniguchi in Tokyo.