TOKYO — U.S. private equity firm Bain Capital has debuted a 110 billion yen ($1 billion) business succession fund focused on midsized Japanese companies, Nikkei has learned.
Bain expects more Japanese companies to sell off subsidiaries and affiliates in restructuring to cope with pressures brought on by the pandemic. Together with bank borrowing, Bain hopes to invest a total of 200 billion yen in 10 businesses valued at 20 billion yen to 50 billion yen each. By narrowing the targets, Bain thinks it can be more agile in making investment decisions.
Bain Capital is one of the largest U.S. investment funds, with assets totaling $130 billion globally. Bain entered Japan in 2006 and has invested in companies such as Kioxia Holdings, formerly known as Toshiba Memory Holdings.
Investment funds have become particularly flush with cash as low interest rates drive a global race for better-yielding assets, a development that could inflate acquisition prices. Even traditional banks are getting into the action by setting up business succession funds that offer financing for their existing client companies.
Arguably, investment funds are still better suited to creating value from companies they acquire, given that their strategies differ vastly from those of banks, whose core business is lending.
Several investment funds focused on Japanese companies have launched recently. U.S.-based equity fund Carlyle Group started a 258 billion yen fund in 2020. The same year, Japan’s Polaris Capital Group formed a 150 billion yen fund.
Listed companies and their units last year sold the highest number of businesses they own in 11 years, according to Recof, which offers M&A advisory services. The pandemic has forced Japanese companies to pick up the pace in restructuring their businesses.
