Carlyle tries again with Japan IPO

Carlyle is making a third attempt this year to list a portfolio company in Japan, where stock market valuations have been chronically low.

The Carlyle Group plans to list another one of its Japan investments, pub-restaurant operator Chimney Group, in an IPO on the Tokyo Stock Exchange in December, according to the Tokyo Stock Exchange website.

Carlyle declined to comment on the IPO.

Japan’s IPO market has been relatively weak this year, with fifteen private equity-backed IPOs raising only $342 million so far in 2012, according to data from Thomson Reuters. This is compared to $328 million raised across four private equity-backed IPOs in South Korea, and $1.2 billion raised across six IPOs in India over the same period.

Carlyle in particular has had a hard time with Japan’s IPO market. The private equity firm has already cancelled two planned IPOs in the country this year – one with LCD manufacturer AvanStrate in April, and another with ball bearing manufacturer Tsubaki Nakashima in September.

Both these IPOs were canceled quite close to the deadline, according to chief executive of advisory firm Brightrust PE Japan Joji Takeuchi.

Takeuchi says that part of the problem is the chronically low valuations of listed companies on Japan’s stock exchange. The current stock market is a good source for take-private deals, but not IPOs, he added.

IPOs account for only ten percent of private equity exits in Japan, according to Brightrust.

In India, Carlyle has had better luck with exits. In October, the firm sold $835 million in shares of Indian mortgage lender Housing Development Finance Corp, the firm’s largest divestment in Asia in 2012, according to media reports. 

Carlyle has $157 billion in assets under management worldwide. The firm opened its first office in Asia in 1998, and now has nine offices in the Asia Pacific region, including Japan. It currently has six investments in Japan, and is set to acquire another, according to its website.