Private equity grabs Japan’s carve-out opportunities
Japanese conglomerates have woken up to the need to divest non-core assets; international private equity houses have plenty of dry powder with which to buy them. This happy alignment appears to have survived Covid-19, unlike other forms of cross-border M&A.
When Blackstone signed an agreement to buy Takeda Pharmaceutical’s consumer healthcare business in late August for ¥242 billion ($2.3 billion), it proved that one of the most dynamic trends in M&A was intact despite the disruption of Covid-19.
That is the trend for large Japanese corporations to divest businesses that aren’t core to them, with international private equity houses cashed-up and eager to pick them up.
It is a big relief for local and international investment bankers in Japan, who have seen other forms of cross-border M&A fall away as the virus persists.
It is also a healthy development, representative of another theme. Japanese conglomerates are finally listening to investors, particularly activists, and streamlining themselves to be leaders in the one or two things they are really good at, rather than just being competent at everything and focused on nothing.
Private equity firms have been excited about the potential in Japan for several years.
The Japanese buyout fund that Carlyle raised in March, at ¥258 billion ($2.4