Carlyle launches Japan fund with $2b target - report

According to Financial News, this makes Carlyle the first global buyout firm to launch a Japan-focused vehicle in around five years. While discussing the firm's fourth quarter earnings in February, David Rubenstein, Carlyle's founder and co-CEO, said a new Japan-focused fund would launch this year.

Bill Conway, co-CEO, added that Japan had been a great market over the last couple of years, with companies on the public market trading at very low multiples. "Maybe they never should have been public or maybe they were just underappreciated for some reason, in a private setting, we've been able to have them become good cash generators," he said.

Carlyle Japan Partners III is expected to tap into opportunities created by Japan's sweeping economic reforms brought in Prime Minister Shinzo Abe, dubbed Abenomics - one of the more immediate effects of which has been for the to yen sink around 20% against the dollar over the last six months.

The PE firm has been investing in Japan for more than a decade. Its 2001 Carlyle Japan Partners I fund posted a 37% net IRR as of December 31, better than US and European funds raised around the same time. Its successor, Carlyle Japan Partners II, raised in 2006, is still in investing mode and recorded a negative net IRR of 5%. The fund reached a final close of JPY215 billion ($2.2 billion) but the corpus was subsequently reduced to JPY165.6 billion.

In October, Carlyle Japan Partners II agreed to buy Diversey Japan, a cleaning supply business, from the Sealed Air Corporation for JPY30 billion ($377 million). In addition, it recently sold Qualicaps to Mitsubishi Chemical and completed a partial exit from Chimney. A majority stake in Japanese software company Broadleaf was sold though an IPO on the Tokyo Stock Exchange in March.

Rival global buyout firm KKR has also been bullish on Japan. In the past few months the firm has added two new directors to it 12-person Japan office and appointed turnaround expert, Shu Minoda, as its new Japan CEO. This suggests that Japan will be a key focus for KKR as it closes its $6 billion pan-Asian fund.

"KKR views the Abe administration of one encouraging industries to grow and be more profitable," Minoda told AVCJ last month. "As such, companies in Japan will find more value in partnering with a global private equity firms like KKR, which can work with Japanese companies through local teams and also by connecting them to their global network."

However, KKR has had it difficulties in Japan. Last year it lost out to government-backed Innovation Newtork of Japan (INCJ) and a group of Japanese manufacturers when it tried to invest in chip maker Renesas. This was followed by complaints from the Japanese Private Equity Association (JPEA) that government-backed funds were squeezing out opportunities for private equity and delaying the restructuring of ailing companies. 

More recently KKR was said to have considered a bid for Japanese electronics giant Panasonic's health-care unit.

 

 

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• North Asia
• Buyouts
• Buyout
• Fundraising
• Japan
• The Carlyle Group
• KKR
• Fundraising