Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

KKR & Co. is back in the business of public-to-private buyouts.

The New York-based investment firm on Tuesday announced a $4.5 billion purchase of Japanese auto-parts maker Calsonic Kansei Corp., marking its first leveraged buyout of a publicly traded company since it snapped up Goodpack Ltd. of Singapore in May 2014. Its most recent U.S. take-private was more than three years ago, in March 2013. 

Change of Pace
Since the pre-crisis buyout boom, KKR & Co.'s public-to-private activity has cooled
Source: Bloomberg
*As part of a consortium ^Complete privatization did not occur until 2014. Exchange rate used reflects average EUR-USD exchange rate between July 2012 and March 2015, when the stock was delisted.

KKR and most of its peers have curbed their pursuit of public-to-private buyouts lately amid lofty equity market valuations -- especially in the U.S. Firms have preferred instead to make so-called add-on acquisitions, in which they combine several smaller businesses. They've also pursued carve-outs (acquisitions of businesses or divisions owned by other corporations) and acquired majority or minority stakes in companies from other private equity firms that can be grown further. (There have been exceptions: Apollo Global Management LLC and Vista Equity Partners, have struck nine U.S. public-to-privates this year between them.)

Buy and Build
The proportion of U.S. add-on deals as a percentage of all buyout activity has risen to 64 percent this year as private equity firms lean toward buying smaller companies and merging them with existing ones
Source: Pitchbook
*2016 data through Sept. 30 ^This enables them to decrease the average investment multiple paid

The Calsonic deal even has elements of a carve-out: KKR is buying Nissan Motor Co.'s 40.7 percent stake in the parts maker as part of the buyout. The purchase values the Saitama, Japan-based company at 7.8 times its trailing 12-month Ebitda, which is a discount to comparable deals including Johnson Controls' merger with Tyco International. It's also a relative bargain, considering the median Ebitda multiple of U.S. mergers and acquisitions, including private equity buyouts, was 11.2 as at Sept. 30, according to data compiled by Pitchbook. 

The Calsonic transaction should make it easier for KKR to raise the slated $7 billion for its third Asia-dedicated buyout fund, as it reflects the types of opportunities that exist in the region and aren't currently available elsewhere. And if all goes to plan, it should bolster the track record of the firm's $6 billion second Asia-focused fund. which had delivered gross returns of 23 percent in the nine months through Sept. 30. Notably, the performance of that Asian fund outpaced gains made by KKR's current European and North American private equity funds, which have posted gross returns of 18 percent and 16 percent, respectively, over the same period.

That's not to say the firm's future Asian efforts won't be contested -- KKR reportedly beat out bids from Bain Capital and MBK Partners for Calsonic. But its dealmaking discipline should please its investors, too: It was part of a consortium that withdrew from bidding for control of Yum! Brands Inc.'s Chinese business after due diligence showed profit margins were under pressure.  

For now at least, it holds a size advantage: rival Carlyle Group LP's largest fund dedicated to the region is $3.9 billion, TPG is raising more than $4 billion for its next Asian fund and Blackstone Group LP currently invests out of a global $18 billion fund. With KKR set to make a "large" commitment of its own into its next Asian fund, shareholders should keep their fingers crossed that the firm can continue to land high-quality targets, regardless if they're public or private. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Gillian Tan in New York at gtan129@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net