Baring Asia agrees Japan electronics buyout

According to a statement, Baring will take a 51% stake in Pioneer Home Electronics Corp. which produces audio equipment and DVD players. The ownership of the remaining 49% will be determined in consultation between the three parties.

The financial terms of the deal, which is expected to close by the end of August, were not disclosed. The home electronics business generated revenues of JPY108.2 billion ($1.06 billion) for the year ended March 2014, up from JPY96.2 billion the previous year. The divison posted an operating income of JPY91 million for 2014, compared toa loss of JPY2.8 billion in 2013.

Pioneer's car electronics business is by far the largest profit center, accounting for 70% of the company's JPY498 billion in revenue last year. The division's profit of JPY12.4 billion exceeded that of Pioneer as a whole due to underperformance elsewhere.

News of the transaction sent Pioneer shares up 4% to close at JPY229 yesterday. Shares in Onkyo surged as much as 12.6% to JPY168.

According to AVCJ Research, this is Baring Asia's first deal in Japan since it acquired a 100% stake in gold and jewelry recycler NetJapan in late 2012 for a undisclosed sum. The PE firm exited the investment in April to Orix Corp. for around JPY21 billion.

This transaction is the latest in a series of Japanese corporate carve-outs by private equity firms. In February, Sony confirmed plans to sell its loss-making Vaio PC division to Japan Industrial Partners (JIP) in a deal valued at around JPY40-50 billion. Prior to that, JIP also bought internet service provider Biglobe from NEC.

Other deals include KKR's purchase of Panasonic's healthcare unit and Advantage Partners' acquisition of Sanyo Electric's digital camera business, which was also owned by Panasonic. Furthermore, The Longreach Group picked up a precision drilling business from Hitachi and plastics manufacturer Sol-Plus Group from Arrk Corporation.

However, deal flow is still lumpier than some industry particpants would like. Earlier this year Richard Folsom, representative partner at Advantage, said he was disappointed by the number of carve-outs relative to the size of the opportunity. He said the weakening of the yen had eased pressure on many large corporations, leading to delays in restructuring and divestments.

Baring has been investing in Asia since 1997 and has total committed capital of over $5 billion. It is said to be targeting $3 billion for its sixth pan-regional vehicle. The fund's predecessor reached a final close of $2.46 billion in January 2011 after just six months in the market.

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• Topics
• North Asia
• Technology
• Buyouts
• Japan
• Technology
• buyout
• Baring Private Equity Asia