For starters

Tracking this month's trends in private equity

A good month for…


The Carlyle Group’s plan to float Japanese ball bearing maker Tsubaki Nakashima adds to the positive sentiment over Japan’s IPO market. After months of economic recovery in Japan, which has pushed the Nikkei index up by about 20 percent this year, Tsubaki Nakashima’s listing is expected to raise as much as $873 million, according to Reuters.
Carlyle isn’t the only firm readying for realisations in Japan. In April, mid-market firm The Riverside Company sold Shinsouki, a large parking lot operator in Japan, to iSigma Capital, a Tokyo-based venture capital firm. The secondary sale marked the first exit from Riverside’s debut Asia fund.

Private equity exits in Japan continue to increase; 45 exits in 2011 made it one of the strongest years on record, the third-highest figure since 2006 when 48 companies exited, according to data from Brightrust PE Japan.

The momentum was expected to continue into 2012. However, it’s not a straight upward trend. Carlyle’s planned listing of LCD glass-maker AvanStrate was recently cancelled for the second time. The firm had originally planned to float the business before the March 2011 earthquake and tsunami, but ended up delaying the IPO. Plans were revived this year and in April cancelled again, suggesting that Japanese markets may not yet be in peak health.

A bad month for…


China’s megabanks were put under the spotlight by none other than China’s Premier, Wen Jiabao. Wen caused an uproar this month by criticising banks in the country for having a monopoly on lending.

He was quoted on China National radio as saying, “Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital.”
Breaking up the monopoly of a few and promoting the growth of banks of diverse sizes and strategies could mean more lending to medium-sized companies trying to secure growth capital. But big wheels turn slowly in China and imminent change is unlikely.

Taiwanese banks, also operating in a sector controlled by a few large entities, have been experiencing a problem of a different sort: losses.

“Taiwan’s banking industry is highly competitive and fragmented with very low earning capacity to cushion against potential credit costs,” according to a recent Standard & Poor’s report.

That’s too bad for some foreign private equity firms who bought Taiwan banks in 2006-2007. Some of these investments made six years ago are ripening for exit and private equity firms could be faced with selling a poorly-performing investment into an overcrowded financial sector.