Monday, April 23, 2007

New model for Japan PE?

Last week two of the US PE titans who have been eagerly (desperately?) scouring Asia for buyout deals and assuming that Japan will be the one (and only?) market in Asia to offer big buyouts - did minority deals. For loss making businesses. With growth potential?

TPG bought 14% of TOMY (toys) and Goldman bought 20% of Usen (cable & internet provider).

From Bloomberg:

TPG, TOMY to Form Capital, Business Partnership

TOKYO--(BUSINESS WIRE)--March 06, 2007 TPG:

-- TPG to become major shareholder

-- Investment to mark first deal solely led by TPG in Japan

Global private investment firm TPG announced today that it has reached a definitive agreement with Japan's No. 2 toy maker TOMY Company, Ltd. to form a comprehensive capital and business alliance.

Under the agreement, TPG will purchase 7 billion yen in convertible bonds with share warrants that TOMY will issue to TPG through a third-party allocation. TPG will also acquire 10.96% of TOMY shares currently held by the investment firm T2 Fund.

In addition, TPG will acquire 1.97% of TOMY shares held by the toy maker as treasury stock and another 1.13% of outstanding shares from the company's subsidiaries. When these share transfers are complete, which is expected to occur by the end of March this year, TPG will become the second largest shareholder of TOMY with a 14.07% stake.

Jun Tsusaka, head of TPG's Japanese operations, commented, "TOMY is well-positioned as Japan's No. 2 toy maker and has huge potential for further growth, especially overseas. Based on TPG's operational strength and global experience, we will now actively provide value to TOMY as a strategic partner to further strengthen the company's market position."

Kantaro Tomiyama, president of TOMY, said, "We are excited to work with the value-creating TPG as a strong partner with an impressive global track record. Combining both partners' strengths will allow TOMY, already one of Japan's major toy makers, to further develop into a leading global toy maker."

The partnership with TOMY will mark the first investment that TPG leads in Japan. The deal directly reflects TPG's basic philosophy of providing operational guidance as well as capital. In this role, TPG will help TOMY thrive in the growing wave of globalization and industry reorganizations. TPG will fully cooperate with TOMY's current management to maximize the company's corporate value. At the request of TOMY, TPG plans to appoint two directors to the toy maker. Additional details of the business partnership will be worked out by TPG and TOMY.

TOMY was formed by the merger between the former TOMY and Takara in March 2006. TOMY owns well-established brands such as the TOMICA diecast and "Licca-chan" (Japan's best selling doll for girls) and also sells a wide variety of brands under license such as Disney and Thomas & Friends. In this partnership with TOMY, TPG will not only offer financial assistance but also provide strategic business support to further enhance TOMY's global brand value. TPG will leverage its international network to support TOMY in strengthening and increasing its presence in Japan and overseas markets through strategic steps such as M&A or alliances with other international players.

From WSJ:

Goldman Sachs to Acquire
Nearly 20% of Japan's Usen

By KAZUHIRO SHIMAMURA and ANDREW MORSE
April 20, 2007

TOKYO -- U.S. investment bank Goldman Sachs Group Inc. said Thursday that it will buy just under 20% of Usen Corp. for 25 billion yen ($210.7 million), becoming the Japanese cable-and-Internet company's second-largest shareholder.

New York-based Goldman will buy 24.51 million newly issued shares at 1,020 yen each, giving it an 18.07% stake. Goldman said it will hold the stake for the midterm to long term, a period generally seen as between three and five years.

The investment comes as Goldman increases its presence in Japan's private-equity market, where attitudes toward such deals are beginning to change. That has allowed Goldman to be involved in some of Japan's most high-profile investments, including a $1 billion investment in struggling electronics maker Sanyo Electric Co.

The perception of private equity in Japan is becoming more positive, said Ankur Sahu, head of principal investments at Goldman Sachs in Japan. "There will be opportunity to do more deals in the future," he added.

Tokyo-based Usen said it aims to reduce the amount of interest-bearing loans from financial institutions and tap Goldman Sachs's expertise in boosting corporate value by raising money from and forming a partnership with the U.S. investment bank.

Usen's top shareholder is the company's president, Yasuhide Uno, who owns a 44.53% stake.

1 comment:

ilanit said...

It's too late, since many of them, including local governmentt funds, are in there already.
I'm not sure that it's the right approach in any case. I say San Diego business investors
Are the best way to invest their money with high risk and high profit?