Private equity firm Bain Capital could take Japanese conglomerate Toshiba private, report says

• US-based private equity firm Bain Capital is looking into taking Toshiba private, Reuters reported.
• Talks have begun and Bain Capital is working on a bid, sources said.
• Earlier this month CVC Capital made Toshiba $20 billion privatization offer, but stepped aside this week.

US private equity firm Bain Capital could take the Japanese conglomerate Toshiba private, sources told Reuters on Wednesday.

Bain Capital has started talks with Japanese banks that could help finance the deal, according to Reuters. The US financial firm may collaborate with peers for a co-investment into the struggling Japanese company.

Toshiba produces a wide range of products such as elevators, nuclear technology, semiconductors, home electronics, batteries, medical equipment and IT products. Until it sold off its majority stakes in its flash memory unit in 2017, it was one of the major players in the chip industry.

Bain Capital was involved in the sell-off of Toshiba's flash memory unit, now known as Kioxia Holdings. Toshiba still has 40% stakes in its former division.

The company has however faced issues since then, plagued by accounting scandals and running up losses in its US nuclear business. Yet it remains a major producer of Japanese military equipment and plays a role in the country's energy supply as a leader in nuclear power.

Toshiba's stock price reached two-year lows in the first quarter, but has since recovered, albeit shakily. On Wednesday, stock fell by 3.3% and closed at 4,205.00 yen ($38.92).

Earlier this month, private equity and advisory firm CVC Capital Partners had made a $20 billion offer to take the firm private, which sparked controversy amongst Toshiba executives. Toshiba's chief executive Nobuaki Kurumatani stepped down shortly afterwards and has been replaced with the former chairman of the company, Satoshi Tsunakawa.

After the tumultuous reaction, CVC Capital distanced itself from the plans on Tuesday, saying in a letter, it would "step aside" for now, Reuters said.

Various other firms have also been said to be thinking about bidding on a Toshiba takeover, including Japanese banks and North American financial firms.

If the deal goes through, Toshiba would be one of the few companies going against the current wave of companies going public.

Regulatory changes in the US have meant direct listings are more accessible and SPACs have become a thriving market. This has been fueled by an increase in retail investing and companies' desire to become publicly traded as soon as possible, based on the idea that this will drive profitability. From the start of the year to mid-March, more special purpose acquisition companies had listed than in the whole of 2020, but not all of them have met with red-hot success.