Photo/Illutration A Toshiba Corp. sign (Toshio Tada)

Toshiba Corp. has given preferential negotiation rights to a Japanese investment fund called Japan Industrial Partners Inc. (JIP) for a potential buyout of the major conglomerate, according to sources.

The tech giant solicited proposals for its restructuring after shareholders rejected a management-backed plan following a series of accounting and governance crises.

JIP has invited Japanese companies such as Chubu Electric Power Co. and Orix Corp. to join and fund its attempt to acquire Toshiba.

Analysts said the key to its success is whether JIP will secure a sum large enough to purchase Toshiba, meaning it will likely need to broaden its coalition of businesses to support its bid.

JIP is an investment fund founded in 2002 that specializes in carve-outs of Japanese companies--in other words, a partial divestiture of a business.

It acquired Sony Corp.’s personal computer business and established Vaio Corp. in 2014.

Toshiba announced in April that it would invite restructuring proposals, which could include suggestions for going private.

JIP submitted a joint proposal with Japan Investment Corp. (JIC), a state-backed investment fund.

Their proposal had proceeded to a second bidding round by July. However, they later parted ways over differences in direction.

JIP submitted another joint proposal with Japanese companies by the end of September.

According to sources, JIP is inviting a wide range of companies to fund its proposal, including Nippon Life Insurance Co., Chubu Electric and Orix.

Toshiba and JIP are expected to discuss the proposal in detail, but analysts said the determining factors will be the size of JIP’s corporate alliance and securing sufficient funds.

Toshiba’s share price has remained elevated in recent days, at a range of 5,000 yen ($34) to 5,999 yen per share, due to the prospect of an acquisition.

The company’s market value is currently in the ballpark of 2.2 trillion yen.

Some analysts believe up to 3 trillion yen will be needed to acquire Toshiba because additional funds on top of a company’s market value are usually needed for an acquisition.

Chubu Electric has decided to contribute tens of billions of yen as part of JIP’s alliance, according to sources.

Chubu Electric has conducted a lot of business with Toshiba, including one deal concerning power generation facilities.

However, analysts said there are not many companies that can contribute such large amounts of money. That means that not only Japanese companies, but oversea firms, including investment funds, could join the alliance.

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