Taking OEP, a JP Morgan private-equity fund, as largest shareholder in a ¥10.3bn alliance (2011)

Whom the money came from

What mattered in this alliance was less the amount than whom the money came from. Some $129.1M (¥10bn) was not trivial for the Nichigas of the day, but neither was it beyond what bank borrowing could have covered. That the company nonetheless installed an investment fund as its largest shareholder suggests a reading that what would tell after liberalisation was not only reliable supply but the use of capital. An operator long sheltered by service areas and licences invited in, of its own accord, the yardstick of return on equity — and that is where the character of the decision shows.

A fund’s holding, on the other hand, has a term. The alliance was dissolved after about three years as having achieved its purpose, and OEP left. What remained behind was a cloud-based sales-management system and a business built so that selling and administrative costs did not swell as volume grew. To the question JP Morgan’s investment arm had put at the end of 2010 — why do your customer numbers keep rising? — Nichigas wrote its answer in the following decade and more of results.