News: Carve-out deals by tech firms ‘just tip of the iceberg’: Carlyle Japan chief.
TOKYO (Reuters) – The recent carve-out deals from tech giants like Hitachi Ltd are just the beginning of a possible divestment of non-core assets by Japanese companies, said the Japanese chief of US buyout firm Carlyle Group.
The comments come after Carlyle recently successfully completed one of his own investments and sees many opportunities for private equity firms on the horizon in Japan.
“This is just the tip of the iceberg,” Kazuhiro Yamada said in an interview with Reuters, citing a spate of recent sales of non-core assets by Hitachi, Panasonic Corp. and Toshiba Corp.
“There are still a significant number of companies with hundreds of subsidiaries in Japan and these companies are considering different options.”
The optimistic outlook for the deal in Japan followed Carlyle’s complete exit from its investment in Japanese data and software company WingArc1st with an initial public offering of 19.4 billion yen ($ 178 million).
WingArc1st, which Carlyle acquired in 2016 from Japan’s Orix Corp for an undisclosed amount, debuted on the Tokyo Stock Exchange on Tuesday.
WingArc1st marks Carlyle’s eighth IPO in Japan, the highest among global equity funds operating in the country, Yamada said, adding that nearly half of the buyout company’s 18 full exits to date have been through IPOs.
In the same interview, Hiroyuki Uchino, founder and chairman of WingArc1st, said he tapped Carlyle five years ago because of his best IPO track record. Carlyle “allowed investment to be made to continue growth after the IPO,” he said.
According to Yamada, Carlyle sees a number of potential acquisition targets like WingArc1st that are strong in niche global markets or in small specialized parts of the global marketplace.
Earlier this year, Carlyle announced the acquisition of another such company, Rigaku Corp, an X-ray test tool maker that plans to go public.
The deal marks the first investment in Carlyle’s new Japan-focused buyout fund valued at 258 billion yen ($ 2.5 billion), the fourth and largest in the country to date.
“We’ll probably do two or three more deals this year (through the new fund),” said Yamada.
($ 1 = 109.1700 yen)
Reporting by Makiko Yamazaki and Yuki Nitta; Additional coverage from Takashi Umekawa; Adaptation by Ana Nicolaci da Costa
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