Value Trapped 🇸🇬

@BainCapital's Tokyo office may now host some of the wealthiest private equity people globally. A single investment in @KIOXIAHoldings, fuelled by the AI boom, has produced what is likely the single best profit of any private equity buyout deal in history. Bain Capital IPO'd KIOXIA, the inventor of NAND memory, in late 2024, having acquired a controlling stake from Toshiba at a valuation of 2trn yen (around US$12bn today) back in 2018. Bain retained a large stake in the company, and despite progressively selling down, still holds 29%. Thanks to the AI boom, Kioxia stock is up more than 10x since IPO, and is now valued at US$75bn, creating a huge windfall profit for Bain's investors, and massive carried interest for Bain Capital and its employees. Bain may have contributed as little as $1.3bn of equity into the initial transaction, but even this contribution may have been levered further up the chain. Bain's remaining stake and amounts already sold amount to more than US$30bn. Let's assume, in very rough numbers, a round $30bn equity profit, which already likely makes this the single most profitable private equity buyout deal of all time. If they can exit at current valuations, the carried interest on that is $6bn, and the employee share of that likely $2.4bn-$3bn. Bain’s entire Tokyo office is 44 people per its website, and you can guarantee the proceeds will not be shared equally! Even if a large chunk is shared with Boston staff, the numbers are still mind-boggling. There is a lot of hard work involved in investing, but sometimes it is about being in the right place at the right time. The crazy thing is, the people inside Bain are likely kicking themselves for IPOing the business and selling down their stake too early! But even crazier is that Bain's earlier bad luck - not being able to IPO at its first attempt in 2020 - turned out to be the best thing that could possibly have happened! Similarly, the proposed deal with Western Digital that fell apart in 2023. The Bain team would have worked incredibly hard at many stages of the process of this investment, but the AI boom created a tail outcome like no other. If you enjoyed this, sign up to Senjin Capital's monthly newsletter at our website. We discuss Japan markets generally, as well as the corporate governance reform, shareholder activism, and M&A in Japan in detail.

@GearoidReidy Japan would absolutely be Buffet's hunting ground if he was starting out today. He has to buy the bigger trading companies and big insurance since the smaller cheap net nets are too small for him today.

Let me introduce what I've been doing for the last 5 years on Asian Century Stocks. To my knowledge it's the largest publication on equities in Asia, even though @illyquid is catching up fast!