Bain to make partial exit from Japanese mushroom producer
Bain Capital Private Equity has agreed to sell a 49% in Yukiguni Maitake, a Japanese mushroom producer, to domestic food company Shinmei. The size of the transaction was not disclosed.
The private equity firm will retain a 51% interest in the business, which it acquired for around JPY9.5 billion ($86 million) in 2015 through a tender offer. Shinmei’s involvement is expected to deliver synergies and the current plan is to re-list Yukiguni Maitake within four years, according to a statement.
Yukiguni (which means “snow country”) was established in 1983 after it developed an innovative method for the mass production of ram’s head mushroom (maitake). It remains a market leader in this segment. However, prior to Bain’s involvement, the company was struggling financially and there were tensions between management and the founder, whose family held a 64% stake.
Yukiguni Maitake’s difficulties arose from the introduction of an experimental production technology that failed to deliver and ended up eating into earnings. Net profit for the nine months ended December 2014 declining 51% year-on-year to JPY258 million.
A new CEO was brought in but the founder retained significant equity ownership and influence, and the banks were uncomfortable with the governance situation. Bain bought the company, took out the existing the creditors and brought in new banks to provide financing.
Yuji Sugimoto, a managing director at the private equity firm, noted that performance had improved since the acquisition as result of initiatives such as structural reforms, supply chain improvements, productivity growth, and the introduction of new product lines. Shinmei said in a separate statement that Yukiguni Maitake's revenue for the most recent financial year was JPY30 billion.
The investment came from Bain’s second pan-regional fund, which closed at $2.3 billion in 2012. Fund III closed in late 2015 at $3 billion plus a GP commitment of $250 million. The private equity firm is part of a consortium – alongside Innovation Network Corporation of Japan (INCJ) among others – that last month was selected as the preferred bidder for Toshiba’s Nand flash memory unit.
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