Carlyle re-lists Japan healthcare staffing business

The private equity firm sold 11.31 million shares, including the overallotment option, at JPY1,300 apiece to raise JPY14.75 billion ($144 million), according to a filing. It reduced its holding from 50% to 10%. Solasto's stock opened at JPY1,222 and ended morning trading on June 29 at JPY1,117, valuing the company at approximately JPY31.58 billion.

Solasto was founded in 1965 as Japan's first educational institution for medical administration. It has more than 25,000 employees and provides services including medical administration outsourcing, long-term care services for the elderly and childcare services.

Carlyle backed a management buyout in late 2011 with a view to improving the business fundamentals and transforming the operating structure in response to changes in the commercial environment. The company was de-listed in early 2012, and its name was changed to Solasto later the same year. The PE firm paid JPY11.5 billion (then $149 million), making the investment through Carlyle Japan Partners II.

Carlyle claims to have helped revive Solasto by strengthening its medical administration outsourcing business and accelerating the expansion of its long-term care business. In the latter area, the company introduced management initiatives for each care facility and established a career center to boost recruitment capabilities. There were also several bolt-on acquisitions, including Cocoticare, a specialist in rental housing for the elderly.

Solasto's sales came to JPY63 billion for the 12 months ended March 2016, up from JPY56.4 billion in the 2012 financial year. Over the same period, EBITDA rose from JPY1.8 billion to JPY3.9 billion, while net income increased from JPY251 million to JPY2 billion. Return on equity also improved from 1.3% to 23.4% as a result of using cash flow from the medication administration outsourcing business to invest in the long-term business and higher balance sheet efficiency.

"I believe that the strong trust between Carlyle and Solasto, as well as the unremitting efforts of the management and employees, have helped the company build the solid business foundation deserving to be listed on the first section of the Tokyo Stock Exchange, and set the stage for the next phase of growth," said Takaomi Tomioka, a managing director with Carlyle, in a statement. He will continue to serve on the Solasto board.

Carlyle is currently investing its third Japan fund, which closed at JPY119.5 billion last year. The PE firm has made 22 investments in the country, with its current and historical portfolio including healthcare sector bets such as Colin Medical Technology Corp, Qualicaps and Sunsho Pharmaceuticals.

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• Topics
• North Asia
• IPO
• Healthcare
• The Carlyle Group
• Japan
• Exit