Carlyle exits Japan's Broadleaf through IPO

Broadleaf went public on Friday, with Carlyle selling 16.48 million shares, 73% of the total number outstanding, and allocated the remaining 2.81 million shares, representing 13%, for an over-allotment. Based on Broadleaf's most recent trading price of JPY1,267 per share, the private equity firm generated JPY24.4 billion ($253 million) through the sale.

Carlyle Japan Partners II acquired Broadleaf, formerly a subsidiary of publically traded company ITX, in November 2009 through a management buyout. The company is one of the largest providers of IT solutions to car maintenance and repair shops, providing business applications to 30,000 clients.

In a statement, Carlyle said the purpose of the management buyout was to focus on the long-term growth strategy of the company, which included changing the business model and expanding overseas in response to industry changes caused by the global financial crisis.

"The mutual trust between Carlyle and Broadleaf, coupled with company president Kenji Oyama's strong leadership, and the efforts of its management team and all employees, have contributed to the successful transformation of the company," said Tamotsu Adachi, managing director and Japan co-representative of Carlyle Japan.

According the Japan Venture Capital Association, IPOs are expected to jump by as much as 67% this year, with new listings expected to rise to 80 from 42 in 2012. This is said to be largely due to the economic policies of Prime Minister Shinzo Abe, which have boosted stock prices and made it easier to sell shares. Companies in the information techonlogy sector, like Broadleaf, are likely to make up the bulk of these listings.

According to AVCJ research, the number of PE-backed IPOs in Japan have increased year-on-year since 2009. Last year there were 36 PE-backed IPOs on various Japanese bourses worth more than $9 billion in total. Ten of these were in the information technology sector. 

Broadleaf is Carlyle's second Japanese IPO exit in the space of three months, following a partial exit from restaurant chain Chimney.

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