Bain Capital Private Equity is selling a 49 percent stake in Japanese mushroom producer Yukiguni Maitake to Japanese food company Shinmei for an undisclosed amount.
Founded in 1983 in Minami-Uonuma, Japan, Yukiguni Maitake produces and markets mushrooms and processed foods in Japan, including king oyster mushrooms, Bunashimeji, bean sprouts, cut vegetables, white maitake, eringi, natto, health foods, and dry seeded processed foods without the use of pesticides or chemical fertilizers.
Bain Capital acquired the company in 2015 for approximately JPY9.5 billion (today, US$86 million) through a tender offer, following a challenging period for the company during which its founding family was in conflict with management, causing its net profits to fall during the nine months to December 2014 by 51 percent to JPY258 million (today, US$2.3 million). After its acquisition, which was the first for Bain in raw food in the Japanese market, Bain delisted the company from the Tokyo Stock Exchange.
Despite these headwinds, Bain and other private equity firms recognized the potential for growth in the Japanese food and agriculture sectors.
“These industries are fragmented so competition is not fierce. Lots of smaller companies means lots of opportunities for M&As, which will help each company to grow,” Kazushige Kobayashi, Tokyo-based managing director of Capital Dynamics, a Swiss company that invests in private equity funds, told Reuters last year.
Indeed, Japan’s implementation of its Japan is Back strategy, which is targeting the doubling of the country’s food, ag, forestry, and fish product exports by 2020, was a driver for the establishment of the Gulf Japan Food Fund by Mizuho Bank at the end of 2014. The fund was created with the goal of supporting Japanese companies along the food chain by establishing connections between Japan and Middle Eastern markets.
Recently, in December 2016, the fund acquired Modern Poultry Farms, the largest egg producer in Oman with the goal of lifting its production capacity in order to meet growing demand through integrating Japanese state-of-the-art technology. The fund also planned to invest to build a new plant in Oman which will set the standard for egg production.
Other Capital Flows
Capital flows by Japanese companies and investors in the food and ag spaces have been increasingly on the radar in recent years – not only domestically, but beyond Japan’s borders as well.
Most prominent perhaps is Marubeni’s announcement in 2012 of its agreement to acquire U.S. grain company Gavilon Group for $3.6 billion. The deal launched Marubeni onto the global stage of leading grain traders, handling 55 million tons of grain per year, and gave the Japanese company a significant presence in the U.S. grain space. Within two years, Marubeni announced it planned to increase its investment into the company with the goal of lifting grain exports from the Gulf of Mexico by an additional seven tons per year.
Little more than a year later, Japan’s Zen-Noh Grain Corporation forged a 50:50 joint venture with GrainCorp headquartered in Calgary, Canada with the goal of expanding its presence in Canada’s grain market.
Last year also saw some major developments with the June 2016 announcement that Japan’s Sumitomo Mitsui Banking Corp. (SMBC) was launching a rice farming joint venture in Akita Prefecture, becoming the country’s first bank to enter the agriculture sector.
This was followed months later with an announcement by Sumitomo Corp. that it had agreed to acquire Dublin-based Fyffes Plc, one of the world’s top fruit distributors, through its wholly-owned subsidiary Swordus Ireland Holding Limited, for €751 million (US$794 million) in cash. Fyffes is the top banana importer in the EU; it also markets pineapples, mushrooms, and melons, and is the top importer of off-shore melons and the third biggest importer of supersweet pineapples in North America. Additionally, it is the largest mushroom producer in Canada and one of the largest mushroom producers in North America.
That same month, Japanese instant and premixed food producer Nagatanien announced it had acquired UK-based freeze dried food and specialty bread producer – Chaucer Food Group – in a deal worth $130 million.
Last year also saw Japan’s Maruha Nichiro, the largest seafood company in the world by turnover, buy a minority stake in New Zealand-based fishing company, Sanford, in an off-market deal for NZ$25 million (US$17 million), and Japan’s Yokohama Reito establish an alliance with Norway’s Hofseth International through which the two acquired Norwegian trout farm Fjordlaks Aqua for NOK 1 billion ($120 million).
Another recent strategic move by Marubeni, announced in July of this year, was its acquisition of Kansas-based Creekstone Farms Premium Beef, a provider of premium beef and pork products, from Sun Capital Partners in a deal reported to be valued at $170 million.
This buy-out follows a trade deal struck this past May between the U.S. and China that effectively opened the Chinese market to U.S. beef imports. The addition of Creekstone Farms, which secured its license to export to China, indicates Marubeni’s intent to gain a leading edge in U.S. beef exports to the lucrative Chinese market.
-Lynda Kiernan
Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com
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