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The head of Carlyle’s Japan business predicts a surge in private equity transactions Post-Covid business environment The pressure on companies to achieve carbon neutrality is increasing, forcing a wave of acquisitions and spin-offs.
In an interview with the Financial Times, Kazuhiro Yamada said that the pandemic is accelerating asset sales and new technology purchases among Japanese companies, which may have taken years to make such decisions.
“Consumer behavior and [the] Due to Covid-19, the business model has undergone tremendous changes, so the companies that have been hit have no choice but to carry out structural reforms,” Yamada said, adding that the cheap financing provided by large Japanese banks makes the environment particularly favorable for private equity. Attractive.
The post-pandemic boost will be built on the excitement of attracting the world’s largest private equity firm to Japan. Several groups, Including KKR, I believe that this country is the market with the most opportunities outside the United States.
The average size of Japanese private equity deals has been rising, but Carlyle focuses on smaller deals, usually involving companies with which it has negotiated for many years. Since 2000, Carlyle, which has been operating in Japan for more than 20 years, has invested more than US$3.2 billion in 27 Japanese companies.
Consulting Group Bain & Co Calculation By the end of 2020, private equity firms held a record total of US$477 billion in unused capital, focusing on the Asia-Pacific region.
Private equity transaction activity slowed down in the first half of last year, but Yamada said that the pace of 2021 is accelerating. “The number of transactions we see is definitely greater than in 2019 and the second half of 2020,” he added.
Dealogic’s data shows that this year’s private equity and other similar investments in Japanese companies totaled US$8.6 billion, while the value of transactions for the full year of 2020 was US$9.5 billion, and in 2019 it was US$10.3 billion.
Big companies such as Hitachi Yamada said that Panasonic will continue to face pressure from shareholders to sell non-core assets.But he added that about half of Carlyle’s trading channels will come from Inheritance problem, Because the company’s surplus of retirees has prompted many people to consider previously impossible options, including selling to private equity.
It is expected that the pressure of global governments to reduce carbon emissions will also force companies to purchase new technologies and withdraw from traditional areas that are not environmentally friendly. “This is obviously an investment opportunity for us,” Yamada said.
After the software company’s initial public offering on the Tokyo Stock Exchange, Carlyle withdrew from its investment in WingArc1st in March. This marks the 18th time it has withdrawn from a Japanese company, 8 of which have already passed IPOs.
Yamada said that a public listing is still the first choice of many CEOs Carlyle deals with in Japan and has an important reputation for these companies.
“For future marketing, funds known as allowing IPOs are very important,” he said, although exiting through IPOs is more time-consuming and riskier than selling to competitors of private equity groups.
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