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Japan state fund open to discussing investment in Sharp

A man using his mobile phone walks past a logo of Sharp Corp outside an electronics shop in Tokyo, Japan, July 31, 2015. REUTERS/Yuya Shino

By Makiko Yamazaki TOKYO (Reuters) - The Innovation Network Corp of Japan, a government-backed fund that has rescued loss-making electronics companies, is open to discussing a possible investment in Sharp Corp if the company seeks help, INCJ's president said on Tuesday. "We are ready to talk with Sharp if the company needs funds for its growth strategy and meets our investment policy," INCJ President Mikihide Katsumata told Reuters in an interview. Once a highly profitable manufacturer of premium TVs that supplies screens for Apple Inc's iPhone, Osaka-based Sharp has come under heavy pricing pressure from Asian rivals. INCJ is the top shareholder of Japan Display Inc <6740 T>, the world's largest maker of liquid crystal displays for smartphones and tablets and a rival for Apple's business. A source familiar with the matter told Reuters over the weekend that the fund was considering a range of options for Sharp, including direct investment and teaming up with Japan Display. Katsumata did not indicate what possibilities the fund would consider with Sharp. A Sharp spokesman declined to comment on Katsumata's remarks and reiterated that his company is considering various options for its LCD business. Sharp is desperate for funds to stay competitive in the global LCD market, after posting a 222 billion yen ($1.85 billion) loss in the year to March when it lost orders to rivals. The industry is struggling with slowing sales to China's mobile phone market. In May, Sharp sought $1.9 billion in its second major bank-led financing in three years. INCJ was established in 2009 to promote new technologies, filling funding gaps left by private-sector investors. The fund engineered what turned out to be a rocky IPO for Japan Display in 2014 but the company regained its footing with relatively strong sales to Chinese smartphone makers. Analysts have said a merger with rival Sharp could help to stabilize the business of both companies. While some critics say the fund has crowded out private equity investments in Japan, it has also been credited with some successful investments, including the restructuring of Renesas Electronics Corp. INCJ still holds a majority stake in the now-profitable Renesas. Asked about a possible exit, Katsumata said INCJ still had work to do to support the company as it grapples with a wave of cross-border mergers and acquisitions sweeping the semiconductor industry. "The global chip industry is in the midst of a major realignment," he said. "We still see some room to help the company." ($1 = 119.7000 yen) (Additional reporting by Reiji Murai and Taiga Uranaka; Editing by Ritsuko Ando and Edmund Klamann)