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Japan has become one of the most undervalued markets for private capital investment.
For decades, the country was trapped in a deflationary spiral, exacerbated by slow growth and an inefficient workplace culture. But Japan’s corporate culture is beginning to shift. Most notably, Japanese conglomerates, long averse to selling divisions (even the money-losing ones), are starting to treat each business as its own entity, setting the stage for more M&A activity.
In response, foreign PE investors have pounced.
KKR, for instance, has been responsible for a ton of deals in the country. In 2016, it bought auto-parts maker Calsonic Kansei for $4.5 billion, the biggest acquisition by a private-equity fund in Japan. In January, KKR acquired Hitachi’s power-tools unit for $1.3 billion.
Pitchbook just came out with its latest analyst report on opportunities in Japanese private equity. Here are the most important takeaways:
• Many Japanese companies are still bloated with poor capital allocation, which provides opportunities for PE firms to streamline operations and expand margins.
• The Japanese corporate tax rate is roughly 24%, one of the lowest tax rates in the developed world. Combined with cheap debt, this could enhance potential PE returns.
• EV/EBITDA multiples for publicly traded Japanese companies sit at 7.9x as opposed to 11.9x for U.S. public companies. It is likely there is even greater variance between public and privately held companies relative to the U.S. or the E.U.
LAYOFFS: Things are not looking good for coding bootcamps. Galvanize, a Denver-based for-profit coding school that has raised approximately $63 million in venture funding, is laying off 11% of its staff. The downsizing comes as the company shifts its focus from teaching online students to serving corporate clients. And it’s not alone. Eight coding schools have shut their doors in the last year, including Dev Bootcamp and Iron Yard. The layoffs at Galvanize are another sign that companies in the nascent coding bootcamp industry are struggling to live up to investor expectations. Get more details here.
MORE UBER: Sorry guys, it looks there will always be Uber news. In his first day on the job, Uber chief Dara Khosrowshahi took a fun selfie with ex-CEO Travis Kalanick, before casually dropping this bombshell: he wants to take the company public in the next 18 to 36 months. “I am not going to bullshit you, and I would ask that you not bullshit me,” he reportedly said to the staff. Read more about what happened at yesterday’s all-hands meeting.
OPEN MIC: To kick off my first week’s Open Mic, I would love to hear your thoughts on the following question: What industry do you think blockchain will affect or disrupt that no one is talking about? Send me your wildest, most brutally honest responses. This should be fun.
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Texas chemical plant explodes after hurricane damage. Wells Fargo raises tally of unauthorized accounts. Disney is cutting staff at ABC. Amazon faces possible lawsuit over eclipse glasses. Organic Doritos.
• Qadium, a San Francisco-based cybersecurity company, raised $40 million in funding, according to VentureBeat. IVP led the round, and was joined by investors including TPG Growth, NEA, Founders Fund, and Susa Ventures. Read more.
• TravelBank, a San Francisco-based provider of a travel expense and rewards app for business, raised $25 million in Series B funding. DCM Ventures led the round, and was joined by investors including Propel Venture Partners, DanHua Capital, New Enterprise Associates, Accel Partners and Silicon Valley Bank.
• HowStuffWorks, an Atlanta-based podcasting company, raised $15 million in Series A funding. The Raine Group led the round.
• BitPesa, a Kenya-based bitcoin remittance platform, raised funding of an undisclosed amount in its follow up to its Series A funding round. Greycroft led the round, and the total capital raised is now $10 million.
• elium, a collaborative platform for knowledge-based organisations, raised €4 million ($4.7 million) in Series A funding. Serena Capital led the round, and was joined by investors including S.R.I.W.
• Adwerx, a Durham, N.C.-based advertising and re-targeting network for real estate agents, raised a $4.3 million in funding, according to TechCrunch. Grotech Ventures led the round, and was joined by investors including Bull City Venture Partners and Alerion Ventures. Read more.
• Gamer Sensei, a Cambridge, Mass.-based professional e-sports coaching service, raised $4 million in funding. Accomplice and Advancit Capital led the round, and were joined by investors including Origin Ventures, CRCM Ventures, Kiwi Ventures, aXiomatic, Abstract Ventures and Subversive Capital.
• SPORTLOGiQ, a Montreal-based developer of sports statistics solutions, raised C$5 million ($4 million) in Series A funding. Rho Canada Ventures L.P. and Anges Quebec Capital S.E.C led the round, and were joined by investors including Mark Cuban and TandemLaunch.
• SafeTrek, a St. Louis, Mo.-based personal safety focused technology company, raised $3.2 million in seed funding. Cultivation Capital led the round, and was joined by investors including New Enterprise Associates, Maveron, and Aspect.
• VeriTread, a Lakeland, Fla.-based startup with products aimed at simplifying the heavy-haul transportation process for consumers and distributors, raised $2.5 million from Sumitomo Corporation of Americas.
• Upper Hand, an Indianapolis-based provider of sports software, raised funding of an undisclosed amount for a total of $2.4 million. Investors include Elevate Ventures.
• Islands, a college-focused digital communication platform, raised $1.85 million in funding. Investors include Greylock, Scott Belsky, and Vaizra Investments, and Howard Lindzon.
• Bambu, a Singapore-based B2B robo-advisor platform provider, raised funding of an undisclosed amount. Investors include Franklin Templeton Investments, Wavemaker Partners, and Robby Hilkowitz.
HEALTH AND LIFE SCIENCES DEALS
• BrainScope Company Inc, a Bethesda, Md.-based medical neurotechnology company, raised $16 million in funding. Investors include DBL Partners, Revolution LLC, ZG Ventures and Maryland Venture Fund.
PRIVATE EQUITY DEALS
• ProAct Services Corporation, a portfolio company of Hammond, Kennedy, Whitney & Company Inc, acquired Thermtech, a Waukesha, Wis.-based heat treating company. Financial terms weren’t disclosed.
• Equistone Partners Europe acquired DefShop, a Germany-based multi-channel retailer for streetwear and hip-hop clothing. Financial terms weren’t disclosed.
• TPG Growth and QRG Enterprises Limited made a minority investment in Campus Activewear, an India-based casual sports and footwear brand.
• The Jordan Company agreed to acquire a majority stake in Odyssey Logistics & Technology Corporation, a Danbury, Conn.-based global logistics provider. Financial terms weren’t disclosed.
• Albaugh LLC, an Ankeny, Iowa-based crop protection chemicals producer, is exploring a sale that could value the company at more than $1.5 billion, including debt, according to Reuters. Read more.
• Blackhawk Network acquired CashStar, a Portland-based digital gifting platform, for $175 million in cash.
• BroadSoft Inc, a Gaithersburg, Md.-based provider of software that helps companies offer cloud-based communications services, is exploring its options, including the potential sale of the company, according to Reuters. Read more.
• Galeries Lafayette will buy a majority stake in La Redoute, a France-based online and catalog retailer, according to Reuters. Financial terms weren’t disclosed. Read more.
• Siemens agreed to buy Tass International, a Netherlands-based self-driving software specialist, for an undisclosed amount, according to Reuters. Read more.
• GetInsured acquired health insurance-focused company ACAExpress.com and its sister brand Benefit Geek. Financial terms weren’t disclosed.
• Lithium Technologies, Inc, agreed to acquire Jive Software’s external community business from Jive Software, a Palo Alto, Calif.-based communication and collaboration solutions provider. Financial terms weren’t disclosed.
• Lukoil (MISX:LKOH) is considering selling its Swiss unit Litasco, according to Reuters. Financial terms weren’t disclosed. Read more.
• RYB Education, a childhood educational services provider, filed for an IPO of American depository shares raising up to $100 million. In 2016, the company posted revenue of $108.5 million on earnings of $5.9 million. Credit Suisse and Morgan Stanley are joint bookrunners in the deal.
• Accel-KKR sold HighJump Software Inc, a Minneapolis, Minn.-based provider of warehouse management, transportation management and logistics software, to Körber AG.
Jesse Phillips joined Booz Allen Hamilton in the corporate development department as lead associate. Previously, Phillips was at Updata Partners.
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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.