Bain mulls $930m financing for Japanese tech firm Works Applications

Shibuya, Tokyo, Japan. Photo by Jezael Melgoza on Unsplash

Bain Capital is considering providing roughly 100 billion yen ($930 million) in assistance to embattled Japanese software developer Works Applications, Nikkei learned Friday.

Tokyo-based Works is known for its business management platforms powered by artificial intelligence. But it has been squeezed in recent years by growing development costs and a series of lawsuits.

The company announced Friday that it would spin off the department in charge of human resources and payroll management platforms, which are used by over 1,000 major corporations. Bain is expected to take full ownership of the new company in exchange for its assistance.

About 2,000 of Works’ 5,000 employees would move to the new entity under the plan. CEO Masayuki Makino would remain at the existing company.

Works provides software for managing human resources and accounting, in addition to other products designed specifically for Japan’s business practices. Its platforms, like Hue and Company, are used by 1,300 mostly large companies.

But delayed product development has weighed on earnings in recent years. Sales dropped 10% in the fiscal year ended June 2018 to 45.2 billion yen, and it posted a net loss of 17 billion yen. Development costs for new software and aggressive hiring have pushed up expenses.

The delays have led to lawsuits as well. Kanematsu Electronics sued Works in 2017 for about 1.4 billion yen in damages, and Furukawa Electric brought a 5 billion yen lawsuit last year.

Works Applications was listed on the Tokyo Stock Exchange’s Jasdaq board until a management buyout with Polaris Capital Group in 2011. A fund under ACA Group, based in Japan and Singapore, has since become the top shareholder in Works.

The software developer had aimed to relist in 2017, but the plan fell through as its earnings declined. It hopes to get back on its feet with help from Bain, which managed to relist call center operator Bellsystem24 Holdings after acquiring it in 2015.

This article was first published on Nikkei Asian Review

Singapore Reporter/s

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.