Baring Asia sells Net Japan for $292m

The exit comes as the firm gears up to raise up to $2.9bn for its latest fund.

Baring Private Equity Asia has sold Net Japan Holdings, a precious metal, jewelry and diamond recycler, to Japanese financial services group Orix Corporation, according to a statement.

Financial details of the transaction were undisclosed, but Baring sold the business for an enterprise value of ¥30 billion (€210 million, $292 million), in which Orix approximately invested ¥21 billion of equity (€148 million, $200 million), according to a source familiar with the matter. That represents a price/ earnings multiple of about 8x, the source said – up from 6x at the time Baring acquired the business.

Baring declined to comment, while Orix did not respond to a request for comment at press time.

Net Japan, which was established in 1995, buys and sells gold, silver, platinum, palladium, diamonds, and fine jewelry owned by individuals via intermediaries. It sells these to refining companies, trading companies and others.

Baring bought a substantial majority stake in 2012. It has since looked to improve compliance and financial reporting, and support international expansion by building distribution businesses across Hong Kong, Bangkok and Singapore. Under Baring’s ownership, Net Japan also acquired its number two rival, Olympic Gold.

Baring invested in the business using capital from its Fund V, a $2.46 billion 2011-vintage. That fund is now approximately 60-65 percent deployed. The sale of Net Japan is Baring’s second exit from this fund, following last year’s sale of Magic Holdings to L’Oreal. This generated a 45 percent IRR, a source said at the time.

In February, Baring exited its stake in Indonesia-based airline cargo and catering company Cardig Aero Services, which yielded a 30 percent IRR, a source said at the time. That investment was initially made from Fund IV, a 2007-vintage, which was showing a 1.7x multiple and 16 percent IRR at the beginning of 2014, according to data from industry sources.

Baring will be keen to return money to LPs as it gears up to raise its successor fund, as revealed exclusively by PEI in March. The firm will return to market in May aiming to collect up to $2.9 billion for fund VI, and hopes to hold a first close by the end of the year.

While Asia fundraising volumes have dropped recently, the region has a lot to offer to investors, Jean-Eric Salata, founding partner and chief executive officer at Baring Asia, told PEI in a recent interview. “What you’re starting to see right now is that Asia seems to be somewhat oversold. Equity capital markets and banks are unsettled, so capital is becoming more difficult for SMEs to access. More assets are being sold because the sellers have no alternative forms of financing available. The opportunities for private equity deals are increasing.”

For a more in-depth look at Baring Private Equity Asia, click here to read our Privately Speaking interview with Jean-Eric Salata, which features in PEI’s April issue.