BEIJING, Oct. 14 (Xinhuanet) -- Goldman Sachs Group Inc and Sumitomo Mitsui Financial Group Inc are bidding for a controlling stake in Takefuji Corp, Japan's most profitable consumer finance company, sources say.

    Goldman is heading a group that wants to buy 58 per cent of Takefuji from founder Yasuo Takei, backed by loans arranged by Sumitomo Mitsui, Japan's third-largest bank, they said. Takei, who faces sentencing next month for wiretapping offenses, said last month he will sell a stake.

    Tokyo-based Takefuji, which has been profitable every year since its establishment in 1966, makes personal loans at 1,900 offices across Japan, charging as much as 29 per cent interest. Goldman's offer, which would require Japan's biggest leveraged financing, is higher than the 58 per cent stake's market value of 600 billion yen (US$5.4 billion).

    "By acquiring Takefuji, a foreign investor can immediately grab 20 per cent of Japan's consumer finance market," said Yoshio Shima, a credit analyst at Deutsche Bank Securities Ltd "Foreign investors are looking to invest while values in Japan are still cheap."

    Takefuji earned 74.7 billion yen (US$679.8 million) in the year ended March 31, more than its rivals Aiful Corp and Promise Co. Japan's consumer finance market is worth US$96 billion a year, according to the Federation of Moneylenders Association of Japan. Takefuji's total stock market value is US$9.4 billion.

    Goldman's Tokyo-based spokesman Orlando Camargo declined to comment. Takefuji spokesman Naoki Morimoto declined to comment. Sumitomo Mitsui spokesman Takashi Morita said the lender has no plans to provide financing for a Takefuji bid.

    Takefuji shares rose as much as 2.9 per cent, and traded 2.7 per cent higher at 7,190 yen (US$65.4) as of 12:36 pm in Tokyo.

    Guilty plea

    Takei pleaded guilty earlier this year to charges he ordered illegal wiretaps on journalists. Prosecutors sought a three-year jail term at a hearing in Tokyo District Court on September 16. Sentencing is set for November 17, Justice Tsutomu Aoyagi said.

    A jail sentence might force Takei, who stepped down as Takefuji chairman last December, to sell shares or risk losing the company's banking licence. He said in court on September 16 that he would sell "a large amount" of shares.

    "Getting a majority stake from the family would make it easier to get banks on board with the financing," said Yusuke Ueda, a credit strategist at Credit Suisse First Boston. "The big question mark is whether the family is really willing to give up control."

    Sumitomo Mitsui agreed in June to buy a fifth of Promise for about 200 billion yen (US$1.82 billion) to help tap the consumer finance market. Goldman, the world's biggest mergers adviser this year, arranged the transaction.

    Goldman invested 150 billion yen (US$1.37 billion) in Sumitomo Mitsui at the beginning of 2003 as part of a business alliance.

    The acquisition would be the largest leveraged buyout in Japan, dwarfing the 261 billion yen (US$2.38 billion) paid by a group led by New York-based investment firm Ripplewood Holdings LLC for Japan Telecom Co last year. Enditem

(Takahiko Hyuga and Jag Dhaliwall/China Daily)