Elderly care business continues to expand due to aging population.
The Asian investment fund MBK Partners is set to acquire Tokyo-based HITOWA Holdings, a leading player in elderly care services. The acquisition is estimated to be around 90 billion yen. The elderly care industry, while expanding, faces challenges such as labor shortages and rising costs, leading to fund-driven restructurings.
Mergers and acquisitions (M&A) are increasingly common in the elderly care sector. In November, Nippon Life Insurance announced the acquisition of Nichii Holdings, which owns Nichii Gakkan, the largest player in elderly care, in a deal valued at approximately 210 billion yen, marking the industry’s largest M&A transaction.
HITOWA operates approximately 140 paid nursing homes nationwide under the facility name “Elise.” The company is also involved in housekeeping services and nursery school operations, with recent revenues exceeding 60 billion yen. HITOWA’s main elderly care business continues to grow, along with its housekeeping and nursery operations.
MBK is acquiring HITOWA’s shares from the domestic fund Polaris Capital Group. Polaris previously bought the company from European-based CVC Capital Partners in 2019 for over 50 billion yen. This makes HITOWA the third company under MBK’s umbrella.
In 2021, MBK acquired elderly care giant Tsukui Holdings (now Tsukui), and in April 2023, it acquired the elderly care business of the Unimat Group. With the additional acquisition of HITOWA, MBK plans to enhance profitability through collaboration with its portfolio companies and accelerate the use of digital technology.
The elderly care market, while growing due to an aging population, is challenged by management difficulties among many operators. Chronic labor shortages, rising utility costs, and aging owner-managers are issues. According to Tokyo Shoko Research, in 2022, the number of bankruptcies, closures, and dissolutions in the “Elderly Welfare and Care Business” exceeded 600 for the first time, totaling 638 cases.
Funds are increasingly interested in acquisitions, seeing potential for significant profit expansion. While care fees, the primary source of income, are fixed regionally and by service, making it difficult to raise unit prices, expanding scale and standardizing recruitment and procurement can reduce costs and increase profitability.
As industry reorganization progresses, it is expected to strengthen the business foundations of each company, increase competition, and improve services, benefiting users.