TPG buys minority stake in Japanese toymaker

TPG has made its first lead investment in Japan, taking a minority stake in TOMY as the country’s second largest toymaker looks to boost overseas sales.

US buyout firm TPG has bought a 14% stake in TOMY, the Japanese toymaker responsible for the Teletubbies, completing its first lead investment in the country.

The deal is on a much smaller scale than TPG’s typical investments in Europe and the US – such as the record-breaking $45 billion bid recently tabled for US utility TXU – but it is a significant step for the firm’s aspirations in the region.

Under the terms of the deal, which will make TPG the second biggest stakeholder, the buyout firm will buy ¥7 billion ($60 million) of convertible bonds with share warrants, as well as acquiring about 14 percent of the issued share capital from the toymaker itself and investment firm T2 Fund.

Based on yesterday’s closing share price, TPG’s 14 percent stake would be worth about $90 million.

The move is intended to facilitate TOMY’s attempts to increase its overseas sales, which currently account for just 15 percent of the total.

TPG is positioning the move as a “business alliance”. It will “not only offer financial assistance but also provide strategic business support to further enhance TOMY’s global brand value, ” according to the firm. Specific details of the partnership have not been finalised, but TPG has already appointed two executives to the TOMY board: Jun Tsukasa and Akio Ishida have both joined as directors.

Tsusaka said: “TOMY is well-positioned as Japan’s No. 2 toy maker and has huge potential for further growth, especially overseas.”

TOMY recently cut its profit forecasts by two thirds, blaming Nintendo’s DS and Wii game consoles for reducing demand for its more traditional products.

TPG, formerly Texas Pacific Group, is re-branding as it looks to emphasise the global nature of its business. The firm has $4.5 billion under management in Asia.