KKR is said to weigh Nissan investment after Honda talks end

LONDON: KKR & Co. is considering investing in Nissan Motor Co., people familiar with the matter said, after the struggling Japanese automaker’s talks to combine with rival Honda Motor Co. failed.

The US-based private equity firm is in the early stages of evaluating an equity or debt investment to improve Nissan’s financial position, the people said, asking not to be identified because the deliberations are private.

Talks are ongoing and KKR may decide not to pursue a deal, the people said. Representatives for KKR and Nissan declined to comment.

On Thursday, Honda and Nissan formally ended negotiations to combine into what would’ve been one of the world’s biggest carmakers.

The two, along with Mitsubishi Motors Corp., will still continue their strategic partnership and collaborate on in-house development of batteries, autonomous driving, software and electric vehicle technology.

Nissan has been casting around for a new partner as talks with Honda wobbled, people familiar with the matter said previously, and is looking for an ally ideally from the technology sector and US-based.

Walking away from the tie-up with Honda is a huge gamble for Nissan, which has an outdated product lineup that’s forced it to discount heavily, destroying its bottom line.

Japan push

KKR has long had a presence in Japan, which accounts for about 39% of its Asia Pacific portfolio, according to an investor presentation last year. Its traditional private equity investments in Japan have generated a gross internal rate of return of about 40%.

The firm has recorded a gross 2.2 times multiple on invested capital across 12 investments in the country since 2010, according to the presentation.

Japan now ranks as the country where it’s deploying the most capital outside the US.

KKR teamed up with local buyout fund Japan Industrial Partners Inc. on an acquisition of Hitachi Ltd.’s chip equipment arm that was completed in 2018.

It relisted the company, now known as Kokusai Electric Corp., in 2023 in what ranked as the biggest Japanese initial public offering in years.

The firm’s other portfolio companies in Japan have included supermarket chain Seiyu, contract drug developer Bushu Pharma, power tool and life science equipment maker Koki, accounting software provider Yayoi and payments platform NetStars.

The PE firm has a number of ongoing potential transactions in the country, where staid corporations now are being shaken up by a wave of interest from foreign capital and activist investors.

KKR earlier this month raised its offer for Japanese software company Fuji Soft Inc. to fend off a rival bid from Bain Capital.

It’s considering a stake in a proposal by Seven & i Holdings Co.’s founding family to take the Japanese convenience store operator private, Bloomberg News has reported.

KKR has also invested in Japanese auto-parts supplier Marelli Holdings Co. The 2022 restructuring of Marelli cost KKR the US$2 billion it invested in the company, though it put in another US$650 million to fund a revamp of the business and it’s now returned to profitability.

Hon Hai Precision Industry Co., the Taiwanese iPhone-maker better known as Foxconn, is also circling Nissan now that Honda talks have broken down.

Chairman Young Liu said earlier this week that Foxconn is open to buying Renault SA’s 36% shareholding in Nissan, and that it was aiming to partner with the Japanese carmaker and not take it over.