Carlyle agrees $2bn Japanese buyout

Carlyle Group has agreed one of the largest deals yet seen in the booming Japanese buyout market – the $2.03 billion purchase of wireless data provider DDI Pocket from KDDI Corp.

US private equity firm Carlyle Group has teamed up with Japanese electronics company Kyocera Corp to reach a definitive agreement for the purchase of wireless data firm DDI Pocket from KDDI Corp for Y220 billion ($2.03 billion; €1.7 billion). Under the agreement, Carlyle will own 60 percent of the business, Kyocera 30 percent and KDDI ten percent. Kyocera previously owned a 13 percent stake, while KDDI had 81 percent.   

DDI Pocket provides personal handyphone service (PHS) wireless data and voice services to more than three million customers and a network of more than 160,000 base stations around Japan. Subscribers to its core mobile data communication services, known as ‘AirH’, have grown fourfold since 2001.

Hailing ‘one of Carlyle’s largest investments ever’, the firm’s managing director James Attwood said: “As the market leader in wireless data services, DDI Pocket is very well positioned in the Japanese market, especially as corporate mobile data services grow.”

Carlyle has pledged to leave the firm’s current management team and employees in place. In a statement, the firm said it expected KDDI general shareholders to approve the transaction in late August, and completion of the deal around the middle of the fourth quarter of 2004.

The announcement of the deal reflects a high level of interest in the Japanese telecommunications sector. Last month, private equity firm Ripplewood Holdings of the US was reported to have made a return of four times its original investment when Japan Telecom was sold to computer group Softbank for Y143.3 billion. Ripplewood had led the buyout of the firm last November alongside investors including Goldman Sachs, Newbridge Capital and PPM Ventures.     
                   
Carlyle Group closed its Japanese buyout fund on Y50 billion in January 2004, and DDI Pocket is the fifth investment from the fund. The others were: Colin Medical Technology Corp, a manufacturer of blood pressure monitors; Kito Corp, a maker of hoists and cranes; Asahi Security Co, a security service company; and Eaccess, a broadband access provider, which Carlyle partially exited via IPO in October 2003.