MBK Taps Finalists For Yayoi In $800M Deal

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Advantage Partners, Bain Capital and Japanese financial company Orix Corp. have advanced to the final round of bidding for MBK Partners‘ planned sale of software developer Yayoi, in a deal worth about $800 million, sources told sister news service Reuters.

If successful, MBK’s exit from Yayoi would be Japan’s third-largest private equity deal this year after Bain Capital’s $2 billion purchase of restaurant chain Skylark and The Carlyle Group‘s purchase of ballbearing maker Tsubaki Nakashima in March for about ¥66 billion ($858 million).

Final bids for Yayoi, which generates steady cash flow from software to manage accounting systems, were due on Nov. 21, five sources said, declining to be identified as the sale process is private. Yayoi has EBITDA of around ¥5 billion, and a bid of 12.5x would take the value north of $800 million.

The shortlist for Yayoi, with two private equity firms and one corporate bidder, mirrors the August auction of a similar Australian software firm, MYOB. On that deal, global funds Bain and Kohlberg Kravis Roberts & Co. contested the asset with British software firm Sage plc. Bain eventually won that deal, valuing MYOB at around 11.3x EBITDA, around 10 percent below the failed Sage bid.

In 2010, KKR paid around 12.5x EBITDA for a majority stake in accountancy software vendor Visma, while HG Capital bought Italy’s TeamSystem for 11.3x EBITDA, UBS said in a research report.

While cash rich corporate bidders bring high multiples to an auction, the Yayoi asset also offers Advantage and Bain a chance to deploy capital from multi-billion dollar funds, and Japan’s mega banks have the liquidity to back them. Advantage Partners is managing a fund worth about ¥220 billion for investments in Japan and overseas, while Bain Capital is seeking to raise over $2 billion for its second Asia fund.

Pan-Asia fund MBK acquired Yayoi in 2007 for ¥71 billion yen, or about 17x EBITDA, at the height of the leveraged buyout boom.

(Stephen Aldred is a correspondent for Reuters in Hong Kong; additional reporting by Junko Fujita and Wakako Sato in Tokyo.)