Mumbai: Advantage Partners LLC, Japan's largest buyout fund, has agreed to acquire US investment fund Lone Star Funds' 68 per cent stake in Tokyo Star Bank Ltd, for around 252 billion yen ($2.2 billion).

Advantage, in a statement published on its website, offered to pay Dallas-based Lone Star 360,000 yen a share for its Tokyo Star Bank stake.

Advantage also made an open offer to buy the remainder of the bank's traded stock at the same price.

Lone Star held two auctions before settling on Advantage Partners as a preferred buyer early this year, but an agreement has been held up for months as the Japanese firm finalised backing.

Also, Tokyo Star's shares slumped along with those of other financial institutions, dropping by a third between May and November.

Four funds affiliated with Advantage Partners are offering 360,000 yen per share or an 8.5 per cent premium to Tokyo Star's historical three-month average closing price and a 2.3 per cent premium to its Friday's closing price.

Advantage is seeking a total stake of at least 75 per cent, but Tokyo Star has yet to endorse the bid.

Tokyo Star, formerly Tokyo Sowa Bank, is one of three troubled Japanese banks acquired by US private equity firms and subsequently listed.

Lone Star acquired Tokyo Sowa Bank in 2001 for 40 billion yen and listed it as Tokyo Star, in late 2005, selling about one-third of the mid-sized bank at 430,000 yen a share.

The acquisition would give Advantage 35 branches and 1.5 trillion yen of deposits, with a niche in lending to small companies in Japan's capital.

The offer period will be announced after getting regulatory approval, the statement said. Advantage plans to keep ownership of the bank for at least three years if the acquisition is successful, it said.