Carlyle-backed Solasto goes public on Tokyo Stock Exchange

Solasto Corp, which is majority owned by the Carlyle Group, went public June 29 on the Tokyo Stock Exchange. Carlyle is expected to sell a maximum of 40 percent of Solasto’s outstanding shares, including the overallotment, through the listing. Tokyo-based Solasto, formerly known as N.I.C. Corp, provides medical administrative and staffing services. Carlyle acquired the company in 2011 in a deal valued at $149 million, Reuters News reported at the time.

PRESS RELEASE

Tokyo – Global alternative asset manager The Carlyle Group (Japan representative: Kazuhiro Yamada; headquarters: Washington, DC; hereinafter referred to as Carlyle) today announced that its majority-owned company, Solasto Corporation (Tokyo Stock Exchange First Section, stock code 6197; headquarters: Minato-ku, Tokyo, Japan; CEO: Yasuhiko Ishikawa; hereinafter referred to as Solasto), went public on June 29, 2016, with its shares trading on the first section of the Tokyo Stock Exchange. Through the listing on the Tokyo Stock Exchange, Carlyle will sell a maximum of 40% of the total outstanding shares (including an overallotment) and in that case continue to own 10% of the total shares in Solasto following the re-listing.

Founded in 1965 as Japan’s first educational institution for medical administration, Solasto (formerly known as N.I.C. Corporation) has over 25,000 employees and provides a wide range of services including medical administration outsourcing, long-term care services for the elderly and childcare services. In February 2012, Solasto was taken private from the second section of the Tokyo Stock Exchange through a management buyout (MBO) transaction to manage the rapid changes in the business environment, build a strong business structure and enhance enterprise value in a sustainable manner. The company celebrated its 50th anniversary in October 2015.

During Carlyle’s investment period, Carlyle worked closely with Solasto to realize its mid-term growth by strengthening its medical administration outsourcing business and accelerating the expansion of its long-term care business. With enhanced management capabilities and improved productivity, the EBITDA margin of Solasto’s medical administration outsourcing business expanded from 7.1% in FY2012/3 to 9.7% in FY2016/3. In the long-term care business, Solasto implemented profitability management initiatives for each care facility and strengthened its recruiting capability by establishing a career center in April 2014. The company also executed several acquisitions, including the acquisition of Cocoticare Inc. As a result, sales rose more than two-fold from JPY 5.6 billion in FY2012/3 to JPY 11.6 billion in FY2016/3 and EBITDA turned from negative in FY2012/3 to positive JPY 970 million in FY2016/3, achieving top-class profitability in the long-term care industry.

Solasto’s company-wide results therefore significantly improved. Consolidated sales increased from JPY 56.4 billion in FY2012/3 to JPY 63.0 billion in FY2016/3 and consolidated EBITDA rose from JPY 1.8 billion to JPY 3.9 billion during the same period. The company improved its ROE from 1.3% in FY2012/3 to 23.4% in FY2016/3 thanks to successful investment in the long-term care business by using cashflow generated from its medical administration outsourcing business and higher balance sheet efficiency.

With these developments, Solasto achieved the objectives of the MBO, which was to strengthen business fundamentals and transform operational structure, and decided to re-list on the stock exchange to pursue the next phase of growth. After the re-listing, Carlyle will continue to support the company’s further business growth with Carlyle Japan L.L.C.’s Managing Director Takaomi Tomioka remaining on the board.

Yasuhiko Ishikawa, CEO of Solasto, said: “I would like to express my gratitude to our customers, business partners and employees for trusting and supporting us since our delisting in 2012, and to our shareholders who backed us up and voted for the delisting. Carlyle has worked hard to enhance our corporate value and build a new foundation for growth by strengthening our organization and developing and implementing our growth strategy, as well as sharing their expertise in M&A execution. We will continue our efforts to become an innovative leader in the field of medical administration and long-term care services while pursuing our corporate vision of ‘Start the “Solastory”: create new business model for medical administration and long-term care.’ With the re-listing of our company, we will have a fresh start and will work hard to carry out our corporate responsibilities as a public company to meet the expectations of our shareholders.”

Kazuhiro Yamada, Managing Director and Head of Carlyle Japan L.L.C., said: “I am pleased that the strong relationship and trust between Carlyle and Solasto has enabled Solasto to achieve its MBO objectives and led to the decision to re-list on the stock exchange. The Carlyle Group has been an active investor in the healthcare sector both at home and overseas. In Japan, we have invested in Colin Medical Technology Corporation, Qualicaps Co., Ltd. and Sunsho Pharmaceuticals Co., Ltd. and built a strong track record of value creation to help these companies grow. Mr. Tomioka will continue to serve as an external director of Solasto to support the company’s continued growth by leveraging our rich experience in the healthcare sector.”

Mr. Tomioka said: “Since our partnership with the management of Solasto, we have implemented a large number of growth initiatives in a timely manner. In December 2015, we established capital alliances with three new strategic partners – Daito Trust Construction Co., Ltd., Toho Holdings Co., Ltd. and Infocom Corporation – to help Solasto increase its enterprise value. I believe that the strong trust between Carlyle and Solasto, as well as the unremitting efforts of the management and employees, have helped the company build the solid business foundation deserving to be listed on the first section of the Tokyo Stock Exchange, and set the stage for the next phase of growth. I am confident that, as a listed company, Solasto will excel in the field of medical administration and long-term care business and make further contributions to the society.”

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About Solasto (formerly named N.I.C. Corporation)
Solasto celebrated its 50th anniversary in October 2015, having been established as Japan’s first medical administration educational institution in 1965. The over 25,000 Solasto employees engage in medical administration outsourcing services for medical institutions around the country as well as long-term care services for the elderly provided through home visits and day care centers and nursing homes in the greater Tokyo, Kansai and Nagoya areas. It also provides childcare services which are mainly certified by the Tokyo Metropolitan government. In addition, it operates “Career Center” focused on securing medical administration service workers and nursing-care helpers and their career development. In October 2012, the company changed its name from N.I.C. Corporation. Its consolidated sales for the year ending March 2016 was JPY 63 billion.
Corporate site:http://solasto.co.jp/
Elderly care services site:http://solasto-kaigo.com/
Childcare services site:http://solasto-hoiku.com/

About The Carlyle Group
The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with $178 billion of assets under management across 125 funds and 164 fund of funds vehicles as of March 31, 2016. Carlyle’s purpose is to invest wisely and create value on behalf of its investors, many of whom are public pensions. Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Market Strategies and Investment Solutions – in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has expertise in various industries, including: aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrial, real estate, technology & business services, telecommunications & media and transportation. The Carlyle Group employs more than 1,650 people in 36 offices across six continents

Carlyle is the only global alternative asset manager to establish a dedicated Japan buyout fund denominated in yen. Carlyle’s Japan buyout funds, which have made 22 investments in Japan, have a track record of supporting Japanese mid-cap companies’ overseas business expansion, enhancing their operational efficiency and strengthening their management infrastructure. In September 2015, Carlyle announced that it raised \119.5 billion (approximately $1.0 billion) for its third Japanese buyout fund, Carlyle Japan Partners III.