Carlyle targets Japan environmental business buyout - update

The deal comprises two parts. The first involves Carlyle making a JPY16.5 billion tender offer for Japan Asia. The firm is willing to buy all outstanding shares for JPY600 apiece, according to a filing. At least 18.3 million shares – a 66.6% stake – must be tendered for the offer to proceed. 

Tetsuo Yamashita, chairman and CEO of Japan Asia, already owns 11.35% of the company directly and through an asset management entity that he controls. He will sell those shares via the tender. Two other investors, Aizawa Securities and JA Partners, which have 12.56% and 2.45%, respectively, will also sell their positions.

Separately, Japan Asia will facilitate Carlyle's acquisition of an 80% interest in Kokusai Kyogo, Japan Asia's main geospatial information business, and 70% of JAG Energy, which designs, builds, and operates solar power plants. The private equity firm will pay JPY20.5 billion, part of it in cash and part through a share swap. 

Japan Asia’s stock closed up 3.8% at JPY352 on November 5, giving the business a market capitalization of approximately JPY9.77 billion.  

The company has three main business lines: geospatial information, green energy, and reforestation. The bulk of its revenue comes from Kokusai Kyogo, a provider of satellite and aerial imaging as well as terrestrial, water and subterranean surveying services. These are used in public utility management, renewable energy and social infrastructure planning, and assessing disaster risk.

Another subsidiary, Xacti, manufactures cameras used on construction sites, in transport surveillance, and by security personnel.

In green energy, Japan Asia manages its own solar power stations and provides development and maintenance services to clients in Europe. It also conducts environmental and sustainability assessments for real estate developments. In forestation, the company owns about 5,000 hectares of forest in Japan and uses geospatial information to manage these assets.

Japan Asia generated JPY97.9 billion in sales for the 12 months ended March, down from JPY102 billion the previous year. Over the same period, it swung from a net loss of JPY2.5 billion to a net profit of JPY1.99 billion.

Orders received by the geospatial information business dropped 10.8% year-on-year to JPY70.3 billion due to an absence of large-scale projects for Kokusai Kyogo. Meanwhile, sales fell 5.5% to JPY68.4 billion, largely due to reduced revenue for Xacti. The green energy and forestry sales contributions were JPY15.5 billion and JPY13.9 billion, respectively.

Carlyle is currently deploying its fourth Japan buyout fund, which closed at JPY258 billion earlier this year. It is more than twice the size of the predecessor vehicle.

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• Topics
• North Asia
• Cleantech
• Buyouts
• Japan
• The Carlyle Group