Auditing and consulting company Deloitte recorded a surge of interest of investors from Asia to the Russian market of mergers and acquisitions. The largest transaction involving Japanese investors in 2017, according to analysts, will be the purchase of 10 percent of the pharmaceutical company Alexei Repik “R-Pharm” by Mitsui & Co. Ltd.
The fact that Mitsui was interested in buying a Russian pharmaceutical company, the media reported back in 2016. And about the signing of an agreement on the sale of shares Repik announced in April 2017. He said that the deal will be closed in the fall. According to the latest media reports, the deal is now in the final stages. Its amount is already known – about 200 million dollars. At the same time, Mitsui has an option to expand the share to 20 percent. Buy new shares the company will be able to under the same conditions as during the first transaction.
It is assumed that Mitsui will help R-Pharm to withdraw its drugs to the Japanese market, as well as to license innovative medicines developed by Japanese, European and American manufacturers. Also, R-Pharm hopes that a Japanese company with extensive experience in pharmaceuticals will help Russian specialists develop medicines production technologies. In addition, cooperation with Mitsui will allow the Russian company to organize joint projects with Japanese drug manufacturers. Finally, thanks to this deal, R-Pharm will be able to get an objective external evaluation, which is important for successful business development.
At the same time, only Russian assets of R-Pharm participate in the transaction. Japanese investors will not control the company’s foreign assets – a plant in Germany, a pharmaceutical complex under construction in Azerbaijan and Turkey, as well as assets in the United States, the United Arab Emirates and India.
Recently, Repik said that the possibility of selling another 10 percent of shares to a Japanese investment fund is being discussed. He does not disclose the name of the fund yet. However, earlier the joint investment fund of the Japan Bank for International Cooperation (JBIC) and the Russian Direct Investment Fund (RFPI) announced at the Eastern Economic Forum about interest in the shares of R-Pharm. As for other possible investors, for them the company remains closed. According to Repik, in the next three to five years to sell someone else shares of “R-Pharm” is not planned.
It is worth noting that until recently 100 percent of the shares of R-Pharm belonged to its founder Repik. For 16 years of the company’s existence, he did not seek new co-owners and business partners. Why now Repik decided to sell shares – is unknown. However, one can accurately say that it is keeping pace with market trends, selling stocks to Japanese.
Deloitte experts note that both in 2016 and in 2017 on the Russian market there were very few major transactions with Western investors (especially American ones). But the number of transactions with Japanese and Chinese investors over the past three or four years has grown several times. Now the number of M & A deals involving Asians has significantly exceeded the number of deals with Western partners.
If the Chinese in the last two or three years are quite confident in the Russian market, the Japanese are just beginning to look at the situation. However, analysts of Deloitte expect that soon they will become bolder, and in 2018 the share of transactions with Japanese investors will increase substantially.
Business cooperation between Japan and Russia has recently been maintained at the imperious level. The idea of deepening economic cooperation between the two countries is actively promoted by Japanese Prime Minister Shinzo Abe. In December 2016, Abe met with Russian President Vladimir Putin. Following the meeting, it was decided to start joint economic activity, despite the continuing territorial dispute over the Kuril Islands. In March 2017, Tokyo hosted the first consultations of Russian and Japanese officials on joint activities directly on the Kuriles.
For several decades, many high-tech companies in Japan worked almost exclusively on the domestic market. However, recently its growth has slowed noticeably, and Japanese businessmen have to pay attention to the markets of other countries. Russia and the CIS countries in this regard are of great interest to the Japanese.