South Korean private equity firm MBK Partners offered to acquire Japanese golf course operator Accordia Golf Co. Ltd. (TYO: 2131) in a deal reportedly valued at 160 billion yen ($1.5 billion), representing roughly a 50% premium over its market capitalization before the potential deal came to light.
Mitsubishi UFJ, Mizuho Financial and Sumitomo Mitsui Financial would reportedly arrange 75 billion yen in senior loans to fund the deal, Reuters said.
MBK Partners was founded in 2005 by a group of former private equity executives at the Carlyle Group (NASDAQ: CG). The firm has a team of 38 professionals, and became the largest local and independent North Asian buyout firm, with over $10 billion in capital under management.
Celebrity corporate raider and former Ministry of International Trade and Industry official Yoshiaki Murakami, Japan’s most notorious and controversial activist investor, reportedly controls an 18.95% stake in Accordia through his partly-owned Reno fund, together with related parties.
Murakami, an outspoken early champion of shareholder rights in Japan, who is now said to be residing in Singapore, has re-entered the fray last year in league with his daughter, almost a decade after a scandal that forced him to close his multibillion-dollar Murakami Fund.
As government reforms spur a revival of activism in Japan, his daughter, Aya, says the nation is now ready for her father’s ideas. She previously worked at Morgan Stanley MUFG Securities and then joined her family’s C&I Holdings, where she became chief executive in 2015.
“Initially it was too early for his thinking to be accepted in Japan. Now the times are catching up,” Aya Murakami told The Japan Times in Tokyo last year, when C&I and related parties had built a stake of 16% in electronics trading company Kuroda Electric Co (TYO: 7517). Murakami and C&I started agitating for change at Kuroda, demanding to get board seats, but were later defeated in a proxy fight, which caused Kuroda’s stock price, as well as other Murakami holdings, including Sanshin Electronics Co., Accordia Golf Co. and Excel Co., to plunge.
MBK’s offer for Accordia comes as the number of regular golfers in Japan has fallen to half its peak during the 1990s, with courses closing at the rate of roughly one per week in 2015, says the Financial Times. If successful, the deal would be one of the biggest in recent years by private equity in Japan.
Accordia’s predecessor was founded in 1981. The company was acquired by Goldman Sachs (NYSE: GS) and renamed Accordia in 2003, after the US investment bank assembled a portfolio of bankrupt golf courses in Japan in the aftermath of the country’s severe economic crisis in the early 1990s. As of March 31, 2016, Accordia owns 43 golf courses in Japan, and operates 93 other golf courses.
Goldman Sachs and other foreign investors had taken over a series of Japanese golf-course operators in the 1990s, as the industry had “crumbled under massive debt,” The Wall Street Journal wrote over a decade ago. “Golf companies borrowed heavily during a building boom in the late 1980s, amid Japan’s property and real-estate bubble,” and folded as those debts came due. Foreign investors including Goldman Sachs, one of the most aggressive buyers, are said to have bought Japanese golf courses at bargain prices, representing less than 10% of their value a decade earlier.
Goldman Sachs took Accordia public in 2006, and at one point became the second biggest owner of golf courses after Dallas, Texas-based private equity firm Lone Star, a notorious vulture fund founded by John Grayken. Goldman exited its investment in Accordia in 2011.
Photo: Aya Murakami, CEO at C&I Holdings.