Baring Asia to invest $538m in Japan's Pioneer

The transaction includes an initial bridge loan of JPY25 billion prior to the third-party allotment, which is scheduled for completion by the end of the year, according to a statement. The private equity firm's aggregate commitment is expected to be in the JPY50-60 billion range.

Pioneer said the Baring investment was considered the best option for stable operation of the business as it works through various problems. Its stock opened at JPY117, down 12.7%, on September 12 following the announcement. As of mid-morning trading on September 13, it had fallen a further 1.7%.

Pioneer was founded in 1937 and rose to prominence in the 1980s with the introduction of laser discs that revolutionized home entertainment and the world's first car CD player. More recently, the company has invested heavily in car navigation systems and plasma displays, but it has struggled to make these business lines sustainable in the face of rapidly evolving technologies.

Revenue for the 2018 financial year reached JPY365.4 billion, down from JPY386.7 billion in 2017 and JPY449.6 billion in 2016. Over the same three-year period, the company has swung from a net profit of JPY731 million to a net loss of JPY7.12 billion, while debt has risen from JPY37.3 billion to JPY50 billion.

Pioneer has previously divested assets to private equity, with KKR picking up a majority stake in its DJ equipment business in 2014. Baring agreed to acquire the company's audio-video operations the same year through a joint deal with Onkyo Corp, but the investment was abandoned when Pioneer and Onkyo decided to negotiate directly without a financial sponsor.

Baring manages seven funds with more than $16 billion in commitments. The firm is in the process of raising Fund VII, which launched earlier this year with a target of $5.5 billion. A first close of $4.5 billion came in July.

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• Topics
• North Asia
• PIPEs
• Industrials
• Japan
• Baring Private Equity Asia
• manufacturing