Bain Capital Boosts Japan Staff by 25% as Competition Grows

Bain Capital is expanding in Japan as competition intensifies among the world’s largest private-equity firms to win deals from businesses undertaking overhauls.

The U.S. company increased its Tokyo headcount by 25% last year to more than 50 people, mainly by recruiting investment professionals, and is open to hiring more, Managing Director David Gross-Loh said. Bain put more than $2 billion into Japanese transactions during 2020, including a take-private deal by nursing-home provider Nichiigakkan Co.

“While there is still uncertainty arising from the pandemic, we continue to see Japan as an extremely attractive investment destination,” Gross-Loh said by email.

Carlyle Group Inc. and KKR & Co. have also been hiring in Tokyo as corporate Japan taps private equity firms to strengthen profit through measures such as divestments and management buyouts. Consumers’ changing behavior during the pandemic has only added to the pressure for companies to revamp business.

The number of Japan-related transactions involving private equity funds rose 6% last year to 153, according to research firm AVCJ, even though the pandemic stalled deal-making in the early part of 2020.

“Private equity companies are quicker than ordinary firms to make investment decisions and are flexible in negotiating purchasing prices, meaning that they can be attractive for sellers,” said Hideyasu Ban, a Jefferies analyst.

Private equity firm MBK Partners announced plans on Monday to take Japanese nursing homes company Tsukui Holdings Corp. private through a tender offer.

Hitachi Ltd. has recently shortlisted Bain, Carlyle and KKR for a new round of bidding for Hitachi Metals Ltd. as the Japanese industrial conglomerate pushes ahead with consolidation, according to people familiar with the matter. Cosmetics maker Shiseido Co. announced Wednesday it would sell its shampoo and affordable skin-care business to CVC Capital Partners in a deal worth 160 billion yen ($1.5 billion), as the Japanese beauty giant shifts more of its focus to making and selling high-end skin products.

In addition to Nichiigakkan’s roughly $1 billion management buyout, Bain last year invested about $800 million to purchase Showa Aircraft Industry Co., a transportation equipment manufacturer. The U.S firm also bought Kirindo Holdings Co. for about $300 million as part of the drugstore chain’s management buyout.

“Changes in consumer behavior, acceleration in digital transformation, as well as structural changes in health-care services and delivery present longer-term opportunities for investment firms,” Gross-Loh said.

©2021 Bloomberg L.P.

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