Bain Capital says launches new Asia fund, eyes Japan

TOKYO Tue Jun 21, 2011 7:05am EDT

Bain Capital Japan Chairman Shintaro Hori speaks during the Reuters Rebuilding Japan Summit in Tokyo June 21, 2011. REUTERS/Kim Kyung-Hoon

Bain Capital Japan Chairman Shintaro Hori speaks during the Reuters Rebuilding Japan Summit in Tokyo June 21, 2011.

Credit: Reuters/Kim Kyung-Hoon

TOKYO (Reuters) - Bain Capital said on Tuesday it has launched its second Asia fund, seeking a larger amount than the $1 billion it raised previously, with Japan remaining a key focus despite the devastating blow to the country's economy from the earthquake in March.

Bain will concentrate on linking up with Japan corporates to pursue overseas acquisitions worth more than 100 billion yen ($1.25 billion), Shintaro Hori, chairman of Bain Capital Japan told the Reuters Rebuilding Japan Summit in Tokyo.

Bain will also continue investing in Japan, where it sees company valuations getting a boost from the involvement of private equity firms, he said. The new fund will invest in China and India as well.

"Japanese companies have so much promise but for some reason they have not been reaching their full potential," Hori said.

Many Japanese firms have been seeking overseas expansion as domestic markets reach saturation point, and they have been turning to global private equity firms such as Bain for their management expertise, Hori said.

Bain has around seven deals with Japanese firms in its pipeline, including buyouts of large food makers in Southeast Asia, Europe and China, an auto parts maker in Europe, and an insurance company in the U.S.

All those companies apart from two are valued at more than 100 billion yen, Hori said.

Discussing Bain's current five-company Japan portfolio, Hori said Bellsystem24's Ebitda, a measure of cash flow, has risen 215 percent since Bain acquired the telemarketing firm from Citigroup (C.N) in 2009.

He said the cash flow for Domino's Pizza Japan has risen 80 percent since Bain bought the company.

While the March earthquake has hit businesses across the country, it has not interrupted Bain's Japan deal flow, Hori continued.

He would not comment specifically on the firm's reported bid for the Skylark restaurant chain, though he said that Bain is working with the company on disaster relief initiatives.

Skylark, which operates various restaurants nationwide, has been offering meals to victims of the March quake in northern Japan, while Bain has been organizing distribution of the food.

Hori said that he remains optimistic on the outlook for Japanese companies even after visiting the region ravaged by the disaster.

"Now we can closely examine companies by looking at how they handle the post quake situation," said Hori.

"I think the quake gives us an opportunity to gauge the real strength of Japanese firms."

($1 = 80.270 Japanese Yen)

(Reporting by Michael Flaherty and Junko Fujita; Editing by Joseph Radford)