RISA Partners is a boutique investment bank which specialises in finance and real estate services. The business covers a wide range of activities including: asset management; corporate turnaround; due diligence; investment advisory; real estate; de
bt servicing; and mergers and acquisitions.
In Japan, mega-banks completed restructuring of under-performing loans several years ago. However for some regional banks, the situation is different with a number of them still owning problematic loans. These are usually to eminent companies operating in the regions that are struggling to repay their debts. Regional banks can't allow local dignitaries to go bankrupt yet they don't have the relevant solutions to rehabilitate them.
This is where Risa comes into play. It makes proposals to improve the cash-flow of troubled banks. The target is to rehabilitate local economies, which requires trust from local people and patience to handle small projects. Investment banks don't enter this market.
Risa is involved with about 70 regional banks. In the past five years, Risa's profit grew 20 times to ¥11 billion. It will not face any repercussions from the credit crunch due to its commitment lines with new bonds and new relationships with six banks.
In spite of the strong growth, Risa's share price dropped 35 per cent in the year to date. The market is dumping all real estate-related stocks without considering the difference in the business models and the balance sheets' strength. This is a good opportunity for long-term investors to purchase healthy companies at bargain prices.
• Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a guide to the future.
The full article contains 305 words and appears in The Scotsman newspaper.
