Private Equity News & Analysis

Japanese buyouts fall 64%

Private equity and principal investment firms have invested just $4.6bn in Japanese buyouts this year.

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Buyout activity in Japan has seen a sharp slowdown this year, with investment and activity down to levels last seen in 2002 and 2003.

A total of $4.6 billion has been invested in deals so far, a 64 percent decline from the $12.67 billion invested in the same period last year, according to data from Brightrust PE Japan, a Tokyo-based private equity firm and investment advisory services provider.

The total number of buyout deals completed fell to 35 from 57, a drop of 39 percent.

In all of 2008, a total of 59 buyout transactions were sealed in the country for a total consideration of $13.1 billion. Even if the remainder of the year sees an uptick in the total number of buyout deals, the total value and volume of buyouts in the year 2009 is likely to be significantly lower than that witnessed in 2008.

The data does not include one-off buyout deals made by corporates.

Japan has also witnessed a slowdown in the total number of exits from buyout deals. So far this year, a total of 23 exits have been made, down from 43 exits last year. A vast majority of the exits, 21 of the 23, have been made through trade sales to corporate houses.

Earlier this month, global private equity firm Bain Capital reached an agreement to acquire a stake of 93.5 percent in Japan’s largest telemarketing company BellSystem24 from Citigroup Capital Partners Japan, valuing the company at about ¥100 billion ($1.1 billion; €746.7 million).

That deal was the largest buyout in Japan since March when Goldman Sachs Capital Partners acquired the outstanding shares in Universal Studios Japan (USJ) for about ¥140 billion. Goldman already owned 41 percent of the theme park operator prior to the acquisition. Asian private equity firm MBK Partners and US investment firm Owl Creek Investments subsequently purchased stakes of about 25 percent and 15 percent respectively in USJ from Goldman, following completion of the deal.

In the last month, The Carlyle Group has also been involved in two buyout transactions in the country. Earlier this month, it tendered a ¥20.7 billion offer for Tokyo-listed Chimney Co, a restaurant and pub operator. In late October, the firm acquired Japanese auto software provider Broadleaf. Though no official details on the transaction value were announced, the management buyout was valued at ¥19.5 billion ($212 million; €142 million) according to reports carried by Reuters.