August 30, 2013

Longreach Acquires Hitachi Via Mechanics

The Longreach Group announced that it has signed an agreement with Hitachi Ltd. to purchase 100% of its subsidiary, Hitachi Via Mechanics, Ltd. The financial closing date for the Transaction is scheduled for 31 October 2013.

According to the press release of August 21, "Hitachi Via Mechanics is a leading manufacturer of micro-drilling machines for printed circuit boards and provides global customers with a range of products including spindle drilling machines, laser drilling machines and pattern edging lithography equipment (exposure machines) . The Company has one of the leading market shares worldwide in spindle micro- drilling machines and laser drilling machines and is one of very few global players with ultrafine and high precision drilling technology that can achieve the requirements for the latest smart phones and other mobile devices."

Hitachi Via Mechanics and its subsidiaries have 1,100 employees. No financial terms are disclosed.

August 13, 2013

Bain Divests 75% of Domino's Japan For JPY 12 billion

Bain Capital has reportedly sold 75% of  Domino's Pizza Japan to Australia's Domino's Pizza Enterprises Ltd. for JPY 12 billion (US$123.4 million).

According to Dow Jones and the Nikkei reports, Australia's Domino's Pizza also agreed to provide JPY 9 billion worth of debt,  giving the Japanese business an enterprise value of 25 billion yen. Brisbane-based Domino's owns the franchise rights for the Domino's brand in Australia, New Zealand, France, Belgium and the Netherlands, which account for about 10% of the global franchise.

Bain Capital would retain 25% of the Japanese Domino's company.

Bain bought 100% of Domino from Higa Industries and Duskin Co., Ltd. for JPY 6 billion in 2010.
With a modest leverage,  Domino's Japan joins the league of high multiple exits in Japan buyouts in the recent past.

August 09, 2013

Japan-Focused GP's Fund Raising Round-Up

According to media reports and market sources,

- Advantage Partners has closed its latest fund with JPY20 billion. The "bridge" fund will have a two-year investment period.

- Carlyle Japan Partners III has reportedly reached its first closing with JPY 26 billion. The target fund size is JPY 100 billion.

- J-Star has completed fund-raising for its 2nd funds with JPY 20.4 billion.

- Japan Industrial Partners reportedly raised USD 300-400 million from overseas investors for its 4th fund.

- PEI reported that Unison Capital will receive approx. USD 130 million from Korea's NPS alongside with MBK and Vogo. Unison has not yet officially started fundraising for its 3rd fund, which is said to have JPY 100 billion target.

August 07, 2013

Japan's Civils Servants' Pension Ponders Asset Re-allocation

According to a Reuters report dated August 6th,

 "The pension fund for Japan's civil servants is considering changing its ultraconservative investment strategy to allow more of its $80 billion to go into stocks and less into domestic government bonds., people familiar with the matter said. The move by the Federation of National Public Service Personnel Mutual Aid Associations, which covers 1.24 million active and retired public servants, follows a shift towards riskier investments by Japan's Government Pension Investment Fund, the world's biggest pension fund with $1.2 trillion in assets."

"Prime Minister Shinzo Abe is pushing public funds to increase returns as part of measures to revive the economy's fortunes. His growth strategy seeks to mobilise Japan's enormous public savings, such as GPIF and the civil servants' pension fund."

"The civil service federation's decision, expected around autumn, also shows the influence of the giant GPIF. Although the broader fund only tweaked its investment strategy, its enormous financial firepower means a potentially big slowdown in investors' purchases of government debt, which is now being bought in massive amounts by the Bank of Japan as part of its aggressive monetary easing." 
"The federation is expected to change the portfolio model that is heavily weighted to domestic bonds," one of the sources told Reuters. "It is considering revising its investment strategy in a way to take more risks, especially after the change by GPIF."

"The civil service fund started working together with a private pension consultant company in June to review its portfolio model, the sources told Reuters."

"As of the end of March, the federation had invested 78.8 percent of its 7.8 trillion yen ($79.12 billion) portfolio in domestic bonds, 6.8 percent in domestic equities, 1.2 percent in foreign bonds, 5.3 percent in foreign stocks, 2.7 percent in short-term assets, 2.2 percent in real estate and 3.0 percent in loans."

Carlyle and Karita Complete Simplex Holdings TOB

SCK Holdings, a JV company equally owned by the subsidiaries of Carlyle Japan and Karita & Company, has completed the tender offer for Simplex Holding, a software and system solution provider focusing on dealing and risk management solutions for financial institutions and online brokers.

The tender offer was announced in early June and the offer proce was set at JPY 45,000 per share vs. past 3 months average of JPY 38,806 and past 6 months average of JPY 33,887.

SCK has acquired 92.65% of outstanding shares (excluding treasury stocks) for JPY 23.6 billion. According to the tender plan described in the FSA filing documents, Carlyle Japan invests JPY 6.3 billion, Simplex management team invests up to JPY 2.1 billion, Karita & Co invests approx. JPY 0.2 billion, while Mitsubishi UFJ Bank provides financing up to JPY 20.5 billion. SCK plans to acquire all outstanding shares of Simplex through 2-step acquisition process.

For FY 2012, Simplex generated net revenues and EBITDA of JPY16.6 billion and JPY2.9 billion respectively.

CLSA Sells 31.96% Of Baroque Japan to Shenzen-based Belle International and 23% to CDH

The Nikkei reported that CLSA Sunrise  Capital has agreed to sell 31.96% of Baroque Japan, Tokyo-based apparel company which owns several "109" fashion brands, to Shenzen based Belle International for approx. JPY 9.3 billion (USD 96 million).  Baroque Japan and Belle International will form a JV to expedite Baroques business development in China.

AVCJ also reported that, in addition to the sale to Belle,  another 23% has been sold to CDH at an undisclosed price. The transaction represents a full exit for CLSA, which previously held a 54.96% stake.

After  CLSA acquired 83% of Baroque in September 2007, CLSA had previously considered to list Baroque on Hong Kong Stock Exchange and sold a part of its holdings.

August 02, 2013

Fortress Buys Sheraton Hotel At Tokyo Disney

Fortress Investment Group LLC completed its acquisition of the Sheraton Grande Tokyo Bay Hotel in the Tokyo Disney Resort area for some 50 billion yen by Thursday, according to media reports.

In February 2007, Morgan Stanley Real Estate and Starwood  bought the "official Tokyo Disney Resort hotel" from Taisei Corp, Japan's leading construction company with cash and loans. The loans were then securitized, and commercial-mortgage-backed securities were sold to institutional investors.

At the Lehman crisis,  property prices plummeted and the Morgan Stanley-Starwood team gave up on rolling over loans. So the hotel's ownership was transferred to CMBS-holding creditors, who had since sought a new buyer.

Fortress is believed to be keeping the hotel's name unchanged and retaining Starwood Hotels & Resorts Worldwide Inc. as its operator. Fortress had set up a fund dedicated to Japanese assets, primarily real estate, in 2010.

Real estate transactions climbed to 2.36 trillion yen in the first six months of this year, the highest level since 2005, according to the Urban Research Institute. The first-half tally stood at 1.75 trillion yen in 2008.

Advantage Partners Divests Kazaka Securities

Kazaka Securities, a major subsidiary of Kazaka Financial Group, which is 100% owned by Advantage Partners, will be purchased by Osaka-based Naito Securities. Naito Securities has client assets worth about JPY 350 billion. The acquisition of Kazaka Securities and Kazaka's JPY 300 billion client assets will make Naito Securities one of the larger medium-size brokerages in Japan.

Advantage bought Kazaka Financial Group in December 2006 from LiveDoor, which was seeking asset divesture as part of its corporate restructuring. 

August 01, 2013

Government Pension Reportedly Contemplating Infrastructure Investments In FY 2015

The Nikkei reported yesterday that "The government has set up a panel to explore ways to diversify the GPIF's investments. Among the new ideas are funds that invest in roads, ports and other foreign infrastructure. The pension giant would only steer a few hundred billion yen in this direction at first, starting around fiscal 2015. Eventually, overseas infrastructure may make up several percent of its total holdings."

As a part of Abe government's growth strategy plan, a panel of experts was established in June under the Cabinet Secretariat. The panel is expected to compile recommendations regarding the investment management of GPIF,  3 mutual aid organizations and 100 independent administrative agencies and national public universities by November/this fall.  The assets concerned add up to JPY 200 trillion.

It was also reported today that the government would consolidate the investment policies and guidelines between the public pensions for private sector employees (Kosei Nenkin) and the pensions for public servants and school teachers (Kyosai Nenkin) in fiscal 2014. This change would cause a number of Kyosai Nenkins, which aggregately manage JPY 80 trillion, to have a portfolio similar to that of GPIF. "KKR", the mutual aid association for national public servants, currently allocates 80% of its JPY 9 trillion asset to domestic bonds - exceeding GPIF's 60%.

Shinkin Central Bank Teams Up With Mitsubishi Corp For Real Asset / Infrastructure Investments

The Shinkin Central Bank (SCB), which manages JPY 30 trillion on behalf of 271 shinkin banks across the country, and Mitsubishi Corp have announced that the two institutions will for a strategic alliance in  four business fields, which include overseas real asset / infrastructure investments.

According to the press release of Mitsubishi Corp, "Through this collaboration, SCB and MC are going to implement step-by-step investments which focus on real asset areas such as real estate, transportation/shipping and infrastructure/energy. In addition, SCB is going to support local credit unions to participate in the financial side of regional infrastructure projects as a lead arranger."

SCB has little experiences in overseas infrastructure investments. According to the Japanese press release of both companies, such "investment" could also include "lending" and the flowchart in the release hints that the target could be both "real assets" and "private equity funds".