The Belgian buyout fund that's emerged as a front-runner to acquire a stake in Opel/Vauxhall is predicting an "imminent" announcement, possibly tomorrow.

Wednesday July 15, is the deadline imposed by the German government for revised bids for Vauxhall/Opel, which is being courted by Magna/Sberbank, RHJ International and Chinese car-maker BAIC. Fiat was an early potential bidder, too.

Although the consortium of Magna and Russian financier Sberbank was chosen as favoured bidder by GM some months ago, RHJ International is currently the favourite, according to inside sources.

Driving this change in direction, just-auto has heard, is a change in strategic thinking by GM in the US.

Since GM is poised to exit Chapter 11 faster than expected and GM Europe's financial position isn't as perilous as it once was — there's now enough cash to keep going until November — GM high-ups are understood to be re-examining the sell-off details.

An important detail is the insertion, at GM's insistence, of a buy-back clause in the sale document, which will allow GM to re-build its global business with a European arm as soon as its finances recover sufficiently.

Magna/Sberbank is understood to have baulked at this development, because its strategy is much more focused towards acquiring platform and manufacturing expertise that can be exported back to Russia, possibly to build-up a new car company behind the former Iron Curtain.

GM is also understood to find it easier to negotiate with RHJ's management team, partly because of its links with US buyout firm Ripplewood.

Ripplewood founder Tim Collins is the largest single shareholder in RHJ with 15%, he sits on the main board and chairs its investment and strategy committee.

In fact RHJ stands for Ripplewood Holdings Japan, a historic reference to its formation as the holding company for Ripplewood's Japanese businesses, which were transferred to the Belgian company and floated on the Euronext exchange in Brussels in March 2005, although RHJ is at pains to point out that today Ripplewood has no holding in its namesake and in fact the R in its name "no longer stands for Ripplewood".

This historic interest in Japan goes back to 2000 when Ripplewood bought out the bankrupt Japanese institution Long-Term Credit Bank and re-named it Shinsei Bank. With this focus on Japanese businesses, RHJ may be a little known company in the automotive world, but 60% of its EU900m of holdings are automotive supplier companies.

Its investments include 60% of Japanese casting specialist Asahi Tec, which also owns Metaldyne, the US metal-basher. Asahi Tec does the bulk of its business in the US, taking 43% of its revenues from car-makers in the US.

Belgian aluminium and magnesium castings supplier Honsil International Technologies (HIL) is also an RHJ investment with 81% in its hands.

Switch maker Niles, a Japanese supplier, is also controlled by RHJ (95%). It supplies Nissan and GM with steering column and door switches.

Japanese automotive lock maker U-shin is also in the RHJ portfolio, although described as an associate subsidiary because it owns just 20%.

RHJ also has two non-automotive businesses. The Japanese holiday company Phoenix Resort is notable as the one-time owner of the world's biggest swimming complex, now closed. Music producer Columbia Music Entertainment (25% holding) has a bigger global brand name.

So what is this diverse, Belgian-based company that reports its earnings in Japanese yen, doing courting one of Europe's biggest OEM carmakers?

"We have automotive investments and we treat our involvement as industrial partners. We are in companies for the long-term. We are not the usual private equity players and we see Opel/Vauxhall as a industrial partnership," said Arnaud Denis, head of investor relations.

RHJ won't say much about its plans for Opel/Vauxhall, if its bid is successful, but it has given an assurance that it won't close any car plants in Germany, which will be music to the ears of German politicians eyeing September's general election and its all-powerful unions, which are on the record as supporting the Magna bid.

What this means for plants in Spain and the UK is unclear, however.

Union reps in Germany are reported to have said that Magna is their favoured bidder because it is the only one to have formally presented its plans, although sources at GM say the unions are also behind RHJ.

Why is not clear, but reading between the lines, its seems clear that RHJ's bid for Opel/Vauxhall will leave GM firmly in control of strategy, if only because GM wants control over its chassis and powertrain technology and assembly assets.

There's also the question of Chevrolet distribution rights, a target for Magna/Sberbank. much to GM's alarm.

If there is a big query over RHJ, it's where the money is coming from. Two weeks ago, RHJ reported losses of EUR1bn for 2009, more than double the EU467m recorded in 2008.

Thanks to the global downturn, its asset portfolio had to be re-valued to EU912m from EU1.6b in 2008, a drop of 43%.

Weak results from its automotive companies were, not surprisingly, the main culprit.

But in its favour RHJ is sitting on a reasonable pile of cash - EUR444m - left over from previous fund-raising calls to wealthy individuals and institutions.

This cash pile is awaiting a target, although whether it is enough to secure the rumoured 55% stake in Opel/Vauxhall is a moot point.

Of course it could raise more finance, but the word from its Brussels HQ is that it won't and with those recent losses, who can blame it.

The coming hours and days may finally provide some of these answers and secure the futures of two of Europe's oldest nameplates.
 
Julian Rendell

Metaldyne sells assets to RHJ International