Bain closes Japan fund at $1b

The vehicle, which has a middle-market remit, launched last October and a final close came at the end of March at the institutional hard cap of JPY100 billion, according to sources close to the situation. The GP contribution was JPY10 billion. There is an additional JPY12.5 billion in non-fee-paying co-investment from the GP, which isn't considered part of the fund. Bain declined to comment.

It has become the second international private equity firm to raise a Japan fund and run it alongside a pan-regional strategy. The Carlyle Group raised its first country fund in 2003 and closed its fourth last year on JPY258 billion, more than twice the size of its predecessor.

The uptick in fund size – and Bain’s decision to raise a standalone Japan pool – reflects a broader trend in Japan, driven by expectations of increased deal flow, chiefly corporate divestments. Several domestic managers have raised or are raising larger funds, while global buyout firms are adding local headcount. Bain told Bloomberg in February that its Tokyo staff grew 25% in 2020 to more than 50.

Of the local GPs, Polaris Capital Group is most ambitious, having raised JPY150 billion for its fifth fund, up from JPY75 billion in the previous vintage. A final close came towards the end of 2020. Meanwhile, Integral Corporation closed its fourth fund at JPY123.8 billion in December, having scaled up from JPY73 billion in Fund III.

Japan private equity fundraising came to $9.3 billion last year, with $3.9 billion of that allocated to buyout vehicles, AVCJ Research’s records show. This represents the second-highest annual total ever, on both counts. The strong showing was underpinned by final closes from Advantage Partners and CLSA Capital Partners, as well as Carlyle and Integral.

Bain is currently deploying its fourth Asian private equity fund, which closed at $4.65 billion in 2018 and typically makes equity investments of $100-400 million. The firm has previously demonstrated flexibility in Japan, moving between mid-cap and large-cap transactions.

Recent activity includes several tender offers for listed companies: aged care provider Nichii Gakkan, aircraft interiors manufacturer Showa Aircraft Industries, and pharmacy chain Kirindo Holdings were acquired for enterprise valuations of JPY122 billion, JPY90 billion, and JPY39.7 billion, respectively.

At the other end of the spectrum, a Bain-led consortium bought Toshiba Memory Corporation for $18 billion in 2018. It remains Asia’s largest buyout deal to date, although earlier this month CVC Capital Partners offered to buy Toshiba Corporation itself at a valuation of $20 billion.

Private equity investment in Japan came to $13.3 billion in 2020, up from $11.7 billion the previous year. The buyout total rose from $8 billion to $8.4 billion. Approximately 60 control deals were announced each year, most of them in the middle market, where succession remains a more prevalent deal driver than carve-outs.

But the biggest buyouts of 2020 were carve-outs, with The Blackstone Group picking up a drug portfolio from Takeda Pharmaceutical for JPY242 billion and KKR taking a majority stake in Walmart-owned retailer Seiyu at a valuation of JPY172.5 billion. More recently, CVC agreed to buy Shiseido’s personal care business at a valuation of JPY160 billion.

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• Topics
• North Asia
• Buyout
• Fundraising
• GPs
• Japan
• Bain Capital Asia