Japan's Polaris to back Panasonic security spin-out
Japan’s Polaris Capital has agreed to back Panasonic i-Pro Sensing Solutions, a spin-out of Panasonic that will take over the parent company’s security systems business in Japan and overseas.
Polaris will take an 80% stake in the new company, with Panasonic holding the remaining 20%, according to a statement. Panasonic i-Pro will include the parent company’s surveillance camera business and its industrial and medical camera R&D department, along with Panasonic’s security camera factory in China and its public safety sales business in North America.
Panasonic has been developing security cameras for a range of customers for over 60 years. It also develops software such as facial recognition to expand the applications of its technology. The company expects rising global concerns with security and safety to boost the demand for its products and sees the new company as a means to achieve stable growth in this market.
Panasonic does not provide specific financial information about the security systems business. However, according to the company’s most recent annual report, the division of which it is a part recorded net sales of JPY1.12 trillion ($10.4 billion) for the year ended March 2018, up from JPY1.05 trillion the year before. Operating profit for the division came to JPY106 billion, up from JPY50.4 billion in 2017.
Polaris is investing through its fourth Japan fund, which closed at JPY75 billion ($665 million) in 2017. The size of its investment has not been disclosed. As majority owner of the new business, the firm plans to use the expertise gained through its previous investments in manufacturing to help Panasonic i-Pro implement a management structure suited for the global market.
Corporate carve-outs have been an important element of the latest fund’s investment strategy, with Polaris acquiring divisions of Asahi, Fujitsu, Rakuten, and Hitachi over the past two years. The firm focuses on mid-cap companies that are not realizing their growth potential due to legacy constraints, and that can benefit from initiatives aimed at revitalization.
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