Merrill Lynch shuts down Japan private equity business; pays $75 million to settle US lawsuit

07 April 2009

Merrill Lynch & Co., the securities firm bought by Bank of America Corp (See: Bank of America buys Merrill Lynch), said it closed its private-equity business, Merrill Lynch Global Private Equity (MLGPE), in Japan as the nation's economy heads into its worst postwar recession.

Merrill closed the business ''recently,'' said Tsukasa Noda, a Tokyo-based spokesman, declining to comment on how many people worked at the unit and how much it had invested. Earlier, the firm had stopped trading in electricity in Japan in January after the company failed to meet its expansion targets for the business. (See: Merrill Lynch to quit trading in Japanese power)

The closure of the Tokyo office comes after many of Merrill's rivals in the region have closed or cut back their Asian operations to save costs as deal flows have withered. Last week, Asia-focused private equity firm Unitas Capital, formerly known as CCMP Capital Asia, said that it has closed its Tokyo office, to focus on deal opportunities in the rest of the region.

The Bank of Japan today said it would provide more funds to commercial banks by broadening the range of collateral it accepts in an effort to encourage lending to companies and prevent the economic slide from worsening.

MLGPE, founded in 1996, makes investments globally, with focus on the United States, Europe, Japan, China, India, Latin America and Australia, according to its company website. In Asia, only one investment was completed by MLGPE - Tongjitang Chinese Medicines Co, a traditional Chinese medicine maker - and most of its deals were made in the Americas and Europe in the past few years, Merrill Lynch's website shows.

MLGPE's investments typically range from $250 million to $750 million, according to the website. Except Tokyo, which used to have about 10 staff, all other regional and country offices of MLGPE are operating normally. Besides MLGPE, which focuses on long-term growth enterprises, Merrill Lynch also manages real estate investment funds in Asia.