Riverside Completes Second Japanese Platform Investment June 01, 2010
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Riverside Finds Right Wavelength with Acquisition of NAKA
Deal Type: Platform Investment
Key Stats: 7th Riverside Acquisition of 2010; 230th Acquisition Overall
Fund: Riverside Asia Fund I
NAKA & Co., Ltd (NAKA)
Based in Yokohama, Japan
- Develops, manufactures and distributes high-end crystal oscillators and crystal units used by such growing industries as microwave backhaul equipment and base stations for mobile communications. The oscillators create electrical signals with very precise frequencies, and are comprised of crystal units with an electronic circuit.
- Major clients include mobile equipment vendors, which use NAKA’s devices in microwave backhaul equipment that provides interconnectivity among base stations – an application that demands high reliability and threshold specifications.
- Crystal oscillators are used in almost all electronic devices that require stable frequencies or precise clocks. These devices help keep track of time, provide stable clock signals for digital integrated circuits, and stabilize frequencies for radio transmitters and receivers.
- NAKA marks the second Japanese platform investment for Riverside and the fourth platform for Riverside Asia Fund I (RAF).
NAKA has earned a reputation among its customers for manufacturing superior products, namely low phase-noise crystal oscillators based on proprietary analogue circuit-design and process knowhow of processing the crystals themselves. NAKA is a leader in the low-phase noise crystal oscillator market using UM-type crystal units, which have lead terminals and are metal-sealed. These units are higher quality but difficult to mass produce. Many of NAKA’s markets require high-mix, low-volume manufacturing.
NAKA differentiates itself by providing superior specifications in frequencies over 1GHz as well as low phase noise, which provides stable high data rates, and with other functions such as wide frequency control range by voltage and temperature stability. Large global competitors cannot deliver the same specifications due to NAKA’s proprietary know-how and circuit design.
The company was founded in 1979 as an electronic parts manufacturer. The founder sold the company to the current Chairman Takakazu Kuroiwa in 2006.
Stu Baxter, Riverside Managing Partner:
“Riverside feels very fortunate to find a business with a stable and long term customer base, and we will always strive to maintain the quality and competitiveness that has led to these special relationships. Building on such solid foundations, Riverside’s primary value driver has been helping businesses with such extraordinary intellectual property expand their addressable markets. This is exactly the way we plan to help NAKA penetrate overseas markets and support the business as it invests in new product lines and becomes a global leader.”
Kiyofumi Nakano, Riverside Partner:
“We’re very excited to acquire a company with such a strong reputation for quality. We’re confident that we can add global customers to NAKA due to its ability to meet superior specifications, and because the wireless network market continues to expand rapidly worldwide.”
Tokihiko Mori, Riverside Operating Partner:
“We believe that NAKA can build on its strong foundation to expand its customer base within the microwave device market, and penetrate new markets like LTE base stations. We plan to boost NAKA’s capabilities, particularly in global marketing, and will consider add-ons that bring new clients, open more global markets and deliver capabilities.”
Tsunaji Shinamura, CEO, NAKA:
“Working with Riverside means a bright future for NAKA. We’ve just been through a period of rapid development and expansion, and Riverside’s operating expertise and international connections and strengths will help us make NAKA even more successful.”
Riverside Team: Tokihiko Mori, Operating Partner; Kiyofumi Nakano, Partner; Hiroaki Wakashita, Associate; Masahiko Hirayama, Senior Advisor, Origination of Riverside Partners KK, Riverside’s advisory company in Japan.
Partner: Resona Bank
The Riverside Company (www.riversidecompany.com or www.riversideeurope.com)
The Riverside Company is a global private equity firm focused on acquiring leading small and medium-sized enterprises (with a value of up to $200 million) and partnering with strong management teams to enhance the success of its companies through acquisitions and organic growth. Since its founding in 1988, the firm has invested in 230 transactions with a total enterprise value of $5.0 billion. The investment portfolio in North America, Europe and Asia includes 73 companies with annual sales totaling $3.3 billion, EBITDA of $506 million and more than 13,000 employees (June 2009). Riverside offers the resources to complete acquisitions smoothly – thanks to its more than $3.0 billion in assets under management, more than 180 professionals in 19 offices (Atlanta, Brussels, Budapest, Chicago, Cleveland, Dallas, Eindhoven, Hong Kong, Los Angeles, Madrid, Melbourne, Munich, New York, Prague, San Francisco, Seoul, Stockholm, Tokyo and Warsaw) and its longstanding relationships with partner lenders. According to Thomson Venture Economics, seven of Riverside’s nine mature funds rank in the top 25% of all funds (as at 31 December 2009). The firm’s investors include the world’s leading pension funds, endowments, funds of funds, insurance companies and banks.