June 1, 2018 / 5:09 PM / 20 days ago

KKR's Kravis says Japanese companies ripe for more carveouts

(Reuters) - Private equity firm KKR & Co LP (KKR.N) wants to buy divisions from Japanese companies seeking to streamline their businesses in the world’s third-largest economy, co-Chief Executive Henry Kravis said on Friday.

FILE PHOTO: Henry Kravis (C) departs after meeting India's Prime Minister Narendra Modi at a breakfast in the Manhattan borough of New York September 29, 2014. REUTERS/Carlo Allegri/File Photo

Kravis told the Bernstein Strategic Decisions Conference that Japan was ripe for dealmaking as the corporate mindset is shifting toward leaner operations.

He cited the CEO of a large Japanese company telling him 8 years ago that he had around 2,000 “core” subsidiaries.

“That has changed,” said Kravis, whose firm he co-founded owns five companies based in Japan. “Today companies are waking up and saying, ‘We really need to do something differently in order to create value for our shareholders.’ So we like Japan a lot.”

Private equity firms favor the investment strategy of buying a neglected unit of a conglomerate because they see the chance to improve it for resale.

New York-based KKR, with $176 billion in assets under management, last year raised $9.3 billion for its most recent Asia-focused buyout fund. In April 2017, it agreed to a $2.3 billion acquisition for Hitachi Ltd’s (6501.T) chip-making equipment and video solution unit.

In a sign of the region’s importance to KKR, Joseph Bae was named co-president and co-chief operating officer last year after leading the company’s push into Asia a decade ago.

Reporting by Joshua Franklin in New York; Editing by Richard Chang

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