Carlisle expects a spike in post-pandemic deals in Japan

Carlyle’s Japan business chief predicts an increase in private equity deals as new Business environment after covid The increasing pressure on companies to achieve carbon neutrality is forcing a flurry of acquisitions and returns.

Kazuhiro Yamada told the Financial Times in an interview that the pandemic has accelerated asset sales and new technology purchases among Japanese companies that may previously have taken years to make such decisions.

‘Consumer behavior and [the] “The business model has changed dramatically as a result of Covid-19, so companies that have been affected have no choice but to undertake structural reforms,” Yamada said, adding that the availability of cheap funding from giant Japanese banks made the environment particularly attractive for private equity.

The post-pandemic consolidation would build on the excitement that has drawn the world’s largest private equity firms to Japan. several groups, Including KKRWe believe the country is the most opportunity-rich market outside the United States.

The average volume of private equity deals in Japan has been rising, but Carlisle has focused on smaller deals, often involving companies it has been in negotiations with for several years. Since 2000, The Carlyle Corporation, which has been in the country for more than two decades, has invested more than $3.2 billion in 27 Japanese companies.

Bain & Co, the advisory group, has calculated Private equity firms collectively held a record $477 billion of unspent capital focused on the Asia Pacific region at the end of 2020.

Private equity deal activity slowed in the first half of last year, but Yamada said the pace is accelerating in 2021. “The number of deals we’re seeing is definitely greater than in 2019 and the latter half of 2020,” he added.

According to Dealogic, there were 25 private equity and other similar types of investments in Japanese companies worth $8.6 billion this year, compared to deals worth $9.5 billion in all of 2020 and $10.3 billion in 2019.

Big companies like Hitachi Yamada said Panasonic will continue to face shareholder pressure to sell non-core assets. But he added that about half of Carlyle’s deals will originate from Succession issuesThe abundance of corporate retirements has led many to consider previously unlikely options, including selling into private equity.

Global government pressure on companies to reduce their carbon emissions is also expected to force companies to buy new technologies and withdraw from traditional unfriendly areas. “Obviously, this will be an investment opportunity for us,” Yamada said.

Carlyle exited its investment in WingArc1st in March after the software company launched an initial public offering on the Tokyo Stock Exchange. This marks its eighteenth exit from a Japanese company, eight of which have been through initial public offerings.

Yamada said that public listings remain the preferred option for many of the chief executives Carlyle has dealt with in Japan and are important to the companies’ reputation.

“It is very important that future marketing be defined as a fund that will allow IPOs,” he said, although exiting with an IPO is more time-consuming and risky than selling to a competitor to private equity groups.

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