In 2005, the management of World, a Tokyo-listed clothing company, completed a buyout of the business in a landmark deal with a transaction value of ¥230 billion ($2.15 billion). Unusually for an MBO, the deal was financed almost entirely with debt. Reportedly undertaken to thwart a potential hostile takeover, it involved only $10 million worth of equity, which management funded with their own money.
Local lenders keen on deals
Largely unaffected by the sub-prime crisis, the Japanese leveraged finance market is open for business. The availability of cheap credit bodes well for buyouts led by private equity. Sponsorless deals on the other hand will remain the exception - despite an interesting precedent. Sharon Lim reports.
