Timothy Collins is one of the best-connected gaijin in Japan these days. And unlike most Western dealmakers, the founder of Ripplewood Holdings LLC, a private equity fund based in New York, spots a lot of low-hanging fruit out there. Where others see plunging companies, Collins sees the ultimate restructuring play--and potentially rich returns for investors--in his three Japan funds, with $2.5 billion under management. "[Japan] has the best engineers in the world, the best products, the best processes," he declares.
Collins' upbeat view gains credibility from his first investment in the country: Shinsei Bank, the reborn Long-Term Credit Bank of Japan, which went bust in 1998. It was bought for $1.2 million, plus a promise to recapitalize it, by a consortium led by Ripplewood. Shinsei is starting to look like a winner. The man Collins picked to run it, ex-Citibank Japan chief Masamoto Yashiro, has launched a new retail strategy, improved its balance sheet, and upgraded its info-tech systems. For the fiscal year ended March 31, the bank pulled in $483 million in net profits.
The charming and plugged-in Collins (Bill Clinton is a friend) has a degree in philosophy from DePauw University and a graduate degree in management from Yale. He learned the art of high-powered dealmaking as a merger specialist with Lazard Freres & Co. and as the New York manager for the Toronto-based investment company Onex Corp. He launched Ripplewood Holdings, named after his family's tobacco farm in Kentucky, seven years ago, after raising about $450 million. In the U.S., he bought a diverse collection of businesses, from a frozen-pie company to a chain of auto dealerships. Collins buys them cheap, then uses skilled managers to fix them up for resale. He's taking the same formula to Japan and hopes to build a record of big and small turnarounds. That could mean a big return for Ripplewood--and Japan too.