KKR seeks Intelligence in Japan

The estimated deal value of the recruitment agency is about JPY32 billion (c.$350 million), making it the largest private equity deal in Japan this year, and the second KKR transaction in the country since it invested in Orient Corp. as part of a consortium in 2007.

Intelligence’s parent company Usen is a large media group listed in the Hercules section of the Osaka Stock Exchange, and operates 10 subsidiaries in broadcasting, broadband and transmission and systems provisions for corporate clients, advertising and the recruitment business.

Usen has been growing its business operations in the past through M&A as well as organic strategies. The media group in March 2006 acquired a 40.1 % stake in recruitment information services provider Gakusei Eigokai (ironically a one-time Carlyle portfolio company), which include 21.57% owned by Yasuhide Uno, CEO of Usen/Chairman of Intelligence. Two year later Usen made Intelligence wholly owned subsidiary via a share swap.

As part of its expansion plans, the company also took out loans of JPY200 billion (c.$2.18 billion) to try and help it to outdo larger rivals in its media distribution business. In an effort to lessen the load of its debts, Usen has been selling off subsidiaries, including a free movie provider GyaO! toYahoo Japan, and now Intelligence to KKR.

On KKR’s side, sources have told AVCJ that Japanese lenders are still providing leverage for “good deals,” though it is dependant on the strength of both the target and the buyer.  In Japan, many private equity players are coming to realize that deal flow, particularly in large-scale buyout deals, is not going to reach 2007 levels due to these constraints. In that vein, buyout firms are feeling pressure to change their investment strategy, or to fight for the deals that are available. KKR opened a Tokyo office in 2006, saying it would look for buyout opportunities, which have until now eluded the group.

This news and recent reports of a bid for Sanyo Logistics Co. by pan-Asian private equity firm The Longreach Group for JPY10.3 billion (c.$113 million) spotlights the health of balance sheets in the Japanese corporate space. Both the Sanyo Logistics and Intelligence deals show the increasing potential of Japan’s private equity landscape, and give hope to buyout firms that are able to readjust expectations and look for mid-market transactions. 

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• Topics
• Media
• Buyouts
• North Asia
• Advantage Partners
• The Carlyle Group
• KKR