Bain Capital Sees ‘Golden Age’ for Private Equity in Japan

David Gross-Loh, managing director of private equity at Bain Capital, discusses the firm’s investments in Japan, and the opportunities he sees in other Asian markets. Bain Capital-led group succeeded in its tender offer for Hitachi Metals Ltd., a unit of the Japanese conglomerate.

When asked about what makes Bain look at Japen, Gross-Loh explains: “Japan is really coming into a bit of a golden age for private equity. There’s been tremendous amount of development and in kind of the infrastructure to support the type of private equity transaction transactions that we and others others do.”

Hitachi Metals announced last year that a consortium led by global private equity firm Bain Capital would buy all the shares of the Hitachi subsidiary for $5.7bn.

The planned deal was for the Bain-led consortium to offer 2,181 yen per share to buy the 47% of Hitachi Metals not owned by Hitachi and spend a further $2.6bn acquiring Hitachi’s 53% stake.

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To elaborate what difficulties Bain faced in Japen, Gross-Loh points out the business model of private equity. “I think it really was the education process to bring people up to speed about what private equity is and what it is, and that it’s got a long term focus, that it builds businesses, that it helps drive efficiency and longer term success.”

Gross-Loh elaborates: “And in the beginning, there just people were not familiar with this with this model. And so talking to key business leaders, talking to government officials and doing transactions that ultimately were successful and helped reposition grow them, that that I think really enhance the credibility. To me, that was the biggest challenge.”

Lastly, Gross-Loh stresses that Japan has an unlocked opportunity for deals: “You’re seeing the benefit of some structural changes in the economy that have been pushed forward by by the government and just all the the population’s secular growth that’s being experienced in India and that’s creating a lot of opportunities. “

Source: Bloomberg

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