KKR this week completed the tender offer for two Japanese buyouts worth nearly $6 billion. The firm acquired Hitachi Koki, the power tool and life science equipment manufacturer of Hitachi Corporation for $1.3 billion, as well as Nissan-backed automotive parts maker Calsonic Kansei for $4.5 billion, one of the largest private equity investments ever in Japan.
Both transactions were structured through KKR’s $6 billion Asian Fund II, which is nearly fully deployed.
KKR acquired all outstanding shares of Hitachi Koki including Hitachi’s 40.25 percent shareholding and Hitachi Urban Investment’s – Hitachi’s real estate unit – 10.9 percent stake in the company. Hitachi Koki manufactures power tools and life science instruments. The company generates close to 80 percent of its sales and manufactures over 90 percent of its products outside Japan.
Meanwhile for Calsonic Kansei, KKR bought Nissan Motor’s 41 percent stake in the parts maker as part of the buyout, the firm's fifth investment in Japan.
KKR’s recent acquisitions in Japan are in line with the increasing trend of Japanese corporations selling non-core businesses in order to boost their return on equity and compete more effectively globally.
According to a Bain & Company report, private equity-backed transactions in Japan increased by 215 percent from $3 billion in 2015 to $10 billion in 2016. The report also expects non-core carve-outs to fuel deal flow in 2017, but with fewer large transactions and increased competition among industry players.