May 29, 2015

MBK Auctions Tasaki

MBK Partners is reportedly soliciting first-round bids to divest its portfolio company, Tasaki.

Tasaki is known for its pearl and generally seen as the No.2 perl jewerler after Mikimoto.

MBK Partner invested JPY 7 billion in Tasaki in the form of preferred shares in October 2008, when Global Financial crisis was erupting. However, Tasaki's profit had fallen into red a few years before the GFC and, by late 2008,  its share price was already a small fraction of its 2006 peak. Nonetheless, the share price further plunged and it took 4 years for MBK to make Tasaki marginally profitable. It was only in the last FY (ending Oct 2014) that Tasaki was able to report JPY 1.5 billion operating profit. For the first quarter of FY 2015, Tasaki reported JPY 0.7 billion net income.

According to the Bloomberg report, "The sale may fetch more than 25 billion yen ($202 million)" and "Chow Tai Fook Jewellery Group Ltd., the world’s largest listed jeweler, is among companies weighing offers."

If all the preferred shares are converted into common shares, MBK's ownership will increase from the 49% to 79%. Apparently with virtually no net debt, if the company is sold at JPY 25 billion, Tasaki deal could bring a 2.5-3x return to MBK's first fund.

No comments: