US private equity firm Carlyle Group will invest about 100 billion yen ($970 million) in Rigaku, a major Japanese manufacturer of analytical instruments, offering funding access and management know-how to pave the way for an initial public offering within the next few years.
A new holding company will be set up to buy out existing shareholders, split 80-20 between Carlyle and Rigaku President Hikaru Shimura. This investment, expected to come before the end of the fiscal year in March, will likely be the first by a $2.3 billion Japan-focused fund, the largest of its kind, set up by Carlyle last year.
The move comes amid a recent push into Japan by global private equity firms as governance reform gains momentum. Carlyle, which opened a Tokyo office in 2000, plans to pour more than $9 billion into Japanese businesses over the next three to five years.
Carlyle will send directors to Rigaku and encourage global expansion, including acquisitions, opening new sales channels and developing new products. Funds consider it less risky to invest in companies that have reached a certain scale, and businesses can expect to earn more from an IPO after expanding their operations.
Rigaku, established in 1951, is among the world’s top manufacturers of equipment for X-ray analysis, and it sells instruments for the medical and semiconductor industries as well. The company reported about 44.1 billion yen in revenue for the fiscal year ended March 2020, with about 65% generated overseas.
Carlyle’s previous investments in Japan have centered on midsize companies, such as Oyatsu, maker of the Baby Star snack brand.