KKR & Co. LP, a U.S. private equity firm, is set to acquire the remaining 10% public shares of Japanese power tool maker Hitachi Koki Co. within six months and may inject fresh funds into the company, said Dattatraya Joshi, executive director and secretary, Hitachi Koki India.
“Within the next six months, they (KKR) will make it 100%,” Mr. Joshi said.
“Hitachi Ltd., which was holding 51% in Koki, completely divested their shareholding and also KKR bought the shares from public shareholders and they delisted the shares of Hitachi Koki in Japan. As of now, KKR is holding 90% of the Hitachi Koki shares. Still, a small portion is with the public.
“KKR acquired Hitachi Koki in March 2017. The power tool industry is worth about $1.3 billion globally and Hitachi decided to sell its subsidiary to focus on its core area of manufacturing,” he said.
“At the end of the day, they want to increase the scale of the company and the group as a whole and also the profitability. There will be coordination to increase the scale of the investee company.
“They are seriously considering fresh investment in this group and they are seriously considering global M&A candidates also. Hitachi and the new candidate can operate independently.
“KKR investment is not a strategic investment,” Mr. Joshi said. “PE funds normally do not go for a strategic investment. It is purely a short-term investment. If you take the history of KKR, their average investment cycle is about seven years. KKR has not forced any of their investee companies to adopt their philosophy or working culture.
“I am not sure what is exactly on KKR’s mind because they think very broadly and globally. I think they are seriously considering to add some more product range to the current segment and also certain allied segments.
Hitachi Koki’s consolidated revenue grew to $1.6 billion in 2016-17 from $1.1 billion in 2014-15.
“There is a lot of scope in domestic market and we can grow multifold,” he said.
‘Challenging year’
“This year is quite challenging,” he said. “We are facing a lot of problems. Fortunately, there is no negative growth. According to me, there will be a higher single-digit growth. First, it was demonetisation and now it is GST. Pre-GST problems were different and post-GST problems different. Pre-GST dealers started destocking our products. Post-GST there is chaos. There is confusion in the market about prices pre-GST and post-GST.”
