KKR to buy Japan SME software provider from Orix

The size of the deal was not disclosed, but Nikkei put it at approximately JPY240 billion ($2.1 billion). Mergermarket, AVCJ’s sister title, reported that KKR bid “well over” 20x EBITDA and that Yayoi generates around JPY10 billion in EBITDA.

Orix said in a filing that it would book a gain of JPY163.2 billion from the sale. It bought Yayoi from MBK Partners in 2014 for JPY80 billion. MBK acquired the company for JPY70 billion in 2007 from Livedoor, which had, in turn, assumed ownership from Advantage Partners in 2004.

Yayoi was founded in 1978 as Nihon Micom and became a unit of US-based software developer Intuit in 1996. It was rebranded as Yayoi in 2003 when Advantage supported a management buyout.

It is the largest financial and accounting software provider in Japan, best known for the Yayoi Series suite and related business support services. The Yayoi Series has been Japan’s top-selling software product for cloud accounting and for desktop business for six and 22 years, respectively.

The company has more than 2.5 million registered users, up from 1.25 million when Orix acquired it from MBK. During this period, it has also shifted from one-time product purchases to subscription-based software-as-a-service (SaaS) packages.

Much of Yayoi’s recent focus has been on helping SMEs adopt digital solutions and migrate more functions to the cloud. This includes participating in the launch of several advocacy organizations.

The country ranks low compared to its peers across most aspects of digitalization – for example, only 9% of retail is online versus 24% in China – and this has prompted a concerted government response, including the formation of a digital agency.

“By welcoming KKR as a new shareholder, Yayoi is even better enabled to provide further value beyond our current framework of providing business software,” Koichiro Okamoto, CEO and president of Yayoi, said in a statement.

“Together with KKR, we will not only support the growth of SMEs, the backbone of the Japanese economy, but also transform the business software industry in Japan and help to accelerate the digital transformation of society through dynamic and innovative product and service development beyond the current Yayoi SaaS products.”

Yayoi generated JPY21.2 billion in sales for the 12 months ended September 2021, up from JPY20.2 billion the previous year. Over the same period, net income fell from JPY5.5 billion to JPY4.9 billion.

KKR is making the investment from its fourth pan-Asian fund. The private equity firm was advised on the transaction by BofA Securities Japan.

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• Topics
• North Asia
• Buyouts
• Technology
• Japan
• enterprise software
• KKR