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Success Stories

Asahi Kasei Homes Corp.

Enter into the housing market in Australia through M&A deal

  • 1. Overview

    Asahi Kasei Homes is one of the leading home builders by number of housing starts in Tokyo and other urban centers in Japan. Under the medium-term management initiative “Cs for Tomorrow 2018” of Asahi Kasei Corp., parent company of Asahi Kasei Homes, the Asahi Kasei Group is targeting net sales of ¥1 trillion and operating income of ¥100 billion in the Homes sector in fiscal 2025. While continuing to expand its existing business cantered on Hebel Haus™ order-built unit homes, Asahi Kasei Homes is also working to create new business in new fields with new business models, and overseas business is one area identified for new business creation.
    Asahi Kasei Homes explored new business opportunities to leverage its strengths in overseas, including Australia. As a result of careful study, Asahi Kasei Homes decided to enter the unit-homes business in Australia cantered on order-built homes through a capital alliance with McDonald Jones Homes. Rather than selling Hebel Haus™ products in Australia, the alliance will leverage the know-how accumulated by Asahi Kasei Homes in Japan to gain synergies with McDonald Jones Homes to expand the unit-homes business in Australia.
    J-ABC has been working with Asahi Kasei Homes for more than 2 years to help them successfully enter the Australian housing market from the market research and finding the right partner in Australia through a number of meetings at the beginning and on-going advisory support for M&A deal and PMI (Post Merger Integration)

  • 2. Details

    Client: Asahi Kasei Homes
    Industry: Housing
    Website: http://www.asahi-kasei.co.jp/asahi/en/aboutasahi/homes/

  • 3. What they achieved and why they chose Australia and McDonald Jones Homes

    Asahi Kasei Homes Corp. has acquired 40% of the shares of McDonald Jones Homes Pty Ltd., an Australian company which constructs and sells unit homes, based on an agreement between the two companies dated June 26, 2017. Acquisition of the shares was completed on July 31, 2017.

    Reason for capital alliance with McDonald Jones Homes
    1) Strength of geographical focus for unit homes in Australia
    Demand for unit homes in Australia is concentrated on the east coast of the country, with some 70% accounted for in the three states of New South Wales, Victoria, and Queensland, where the three most populous cities, Sydney, Melbourne, and Brisbane, are located. Based in Newcastle, New South Wales, in the vicinity of Sydney, McDonald Jones Homes is ranked No. 6 in 2016 for unit-home starts in Australia and ranked No. 1 in New South Wales,* the market that holds the greatest promise in Australia fuelled by a continuously growing population.
    *According to Australia’s Housing Industry Association(HIA).

    2) Potential to leverage Asahi Kasei Homes’ know-how in design standardization and commercialization
    Australian unit homes are generally wood-framed one-storey homes or brick homes. The mainstay products of McDonald Jones Homes are homes with a steel-frame structure, including those with autoclaved aerated concrete (AAC) exterior walls. Asahi Kasei Homes believes this presents an outstanding opportunity to leverage the know-how it has accumulated in its own order-built Hebel Haus™ unit-homes operation. Especially against a backdrop of cost pressures due to a shortage of construction workers, it is believed to be possible to reduce construction costs while raising construction capacity by combining the marketing and technical strengths of McDonald Jones Homes, Australia’s leader in the field of steel-frame unit-homes, with the know-how of Asahi Kasei Homes in standardization and systemization.

    3) Long-life residence strategy and compatible company visions
    Based on a belief in “people being at the centre of our business,” McDonald Jones Homes operates under the principle of being the most trusted home builder with the highest standards, which is aligned with the Asahi Kasei Homes vision of realizing long-life homes that provide ongoing customer satisfaction. Through its capital alliance with McDonald Jones Homes, Asahi Kasei Homes looks forward to achieving sustainable growth and expansion of its operations in the Homes sector.

  • 4. How they did it

    J-ABC introduced and facilitated discussions* with a number of key players in Australian housing industry to understand the housing market and businesses in Australia based on the selection criteria from Asahi Kasei Homes including:
    • Housing Industry Association (HIA) in NSW, VIC and QLD
    • Master Builders Australia in NSW, VIC and QLD
    • Urban Development Institute of Australia in NSW, VIC and QLD
    • The state governments and local city councils in NSW, VIC and QLD
    • A number of property developers in NSW, VIC and QLD
    • A number of housing companies in NSW, VIC and QLD
    *Total more than 40 individual meetings were organised and attended by J-ABC

    J-ABC conducted some industry researches to create a report written about some detailed analysis of McDonald Jones Homes.
    J-ABC also worked with some industry experts to analyse Australian builders and housing industry outlook to create some reports.
    During the M&A process, J-ABC provided strategic advice to Asahi Kasei Homes and also attended the meetings with McDonald Jones Homes for Asahi Kasei Homes to facilitate and support the discussions.
    After the M&A deal signed, J-ABC is currently supporting Asahi Kasei Homes for their PMI (Post Merger Integration) activities to collaborate with McDonald Jones Homes as of Nov 2017.

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Testimonials

Mr. Takafumi Terashima, Hokkaido Electric Power Co.,Inc.

  • Please share with us the key issues/difficulties you experienced when doing business in Australia prior to engaging Japan Australia Business Creators (J-ABC)? What did you task J-ABC to do?

    Because Australia and New Zealand are developed countries of electricity liberalization, our company decided to conduct some researches about the electric power retail businesses in Australia and New Zealand. We were originally struggling to organise this research by ourselves because we didn’t have any connections with retailers to conduct the research in Australia and New Zealand and we needed to confirm all the meetings within short period of time.
    Therefore, we were looking for the local company in Australia which was not only very familiar with the specialised area to be researched for translation and interpretation but also could organise the meetings with right companies and departments for our research based on what we wanted to know/ understand.

  • Why did you choose J-ABC?

    It is because we found out that J-ABC could deal with everything we were in trouble through some discussions before the contract. In particular, we immediately decided to sign a contract with J-ABC because managing director of J-ABC could accompany all the meetings in Australia and New Zealand. The fact that the offer price from J-ABC was very reasonable is also a major factor.

  • In regards to the service J-ABC provided, what would you say has been most helpful?

    (1) J-ABC used a wide range of their network to organise meetings with the companies which seem difficult for us to organise within a short period of time.
    (2) Regarding the items/ matters of our research, despite only telephone and e-mail exchanges in advance, J-ABC could understand the details and had been able to support our research.
    (3) Besides J-ABC could organise all the meetings with the companies which we wanted to meet, J-ABC was also able to provide support to select companies that match our research purpose and organised the meeting with them as well.
    (4) Following our visits in Australia and New Zealand, J-ABC did follow-up to each company who we met and support in creating our internal report.

  • Did you find or learn something through J-ABC’s service which you think is useful for your future project?

    In regards to the research in overseas including specialised research items, we could understand that it is much harder than what we thought to organise the meetings with right departments and people in overseas without having any relationships with these companies. Even if we could initially contact some companies in Australia and New Zealand, they closed their window to talk with us.
    Therefore, we could understand that it is most effective and efficient way to conduct the specialised research in overseas is asking local consulting company like J-ABC to support us.

  • What is the main difference between J-ABC’s consulting service and others which you have used before?

    We asked another company to do the same things in Australia and New Zealand, they could not deal with the companies in Australia and New Zealand properly and they could not organise the meetings with them.
    J-ABC has a wide range of relationships, knowledge and experience in Australia and New Zealand. I think that this is the biggest difference between what J-ABC can do and what other cannot do.

  • What would you say to someone who may be undecided about participating in J-ABC service and consulting?

    J-ABC can deal with everything from preliminary survey to follow-up after the meetings based on what we are looking for.
    J-ABC explain the details of their consulting services during the first consultation and find out the solution to overcome the issue with us, if you are looking for any business support or consulting services to do your business in Australia, we recommend you contact J-ABC first.

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Mr. Sato, Mitsui Engineering & Shipbuilding Co., Ltd.

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Mr. Tsukada, Mitsui Engineering & Shipbuilding Co., Ltd.

  • Please share with us the key issues/difficulties you experienced when doing business in Australia prior to engaging J-ABC? What did you task J-ABC to do?

    We were in a joint business collaboration with an Australian partner (not J-ABC). The purpose was to plan the pilot project relating to renewable energy.
    We asked the Australian partner (not J-ABC) to lead our project. However, this Australian partner was not able to adequately research the necessary information for the project, perhaps due to a lack of business experience. This resulted in delays in the project’s progress and our client in Japan was not satisfied.
    We felt that there was a communication barrier with this Australian partner, making it difficult for the full scope of the project to be communicated and understood. Furthermore, cultural/management differences exacerbated the situation.
    We tasked J-ABC to research business opportunities for renewable energy in Australia, with a focus on the feasibility of our project in Australia. We felt confident in handing over our project specification to J-ABC after our first consultation with J-ABC.

  • Why did you choose J-ABC?

    J-ABC was recommended to us through a major Japanese company. J-ABC not only has a presence in Australia, J-ABC also has the capability to carry out the research.
    An added advantage was that we were able to communicate clearly our requirements in Japanese to J-ABC.

  • In regards to the service J-ABC provided, what would you say has been most helpful?

    J-ABC has a broad range of human network and has plenty of information/ data base. Furthermore, J-ABC was willing to go beyond their scope to provide us with useful technical information relating to our project.

  • Did you find or learn something through the J-ABC’s service which you think is useful for your future project?

    Our experience has shown us that it is difficult to plan and execute a project overseas. Although we approached J-ABC to conduct the initial research only, on hind sight, we should have approached J-ABC to do the (total) project management from the project planning stage (early stage) and to lead the project in the right direction.
    We would recommend J-ABC and will definitely engage J-ABC to support our project in Australia from now on.

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Mr. Kawahara, The government of Japan

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General Manager of one of the top major Japanese energy companies

  • Please share with us the key issues/difficulties you experienced when doing business in Australia prior to engaging Japan Australia Business Creators (J-ABC)? What did you task J-ABC to do?

    We approached J-ABC to arrange meetings with Australian companies that we did not have any prior contact or relationship with.

  • Why did you choose J-ABC?

    J-ABC gave us the confidence through their detailed pre-consultation that they had good contacts/connection with the Australian companies that we wanted to meet. J-ABC also demonstrated how these Australian companies would be targeted and we were satisfied with the approach.

  • In regards to the service J-ABC provided, what would you say has been most helpful?

    (1) From the pre-consultation that J-ABC provided, J-ABC was able to understand our needs and background details. Prior to the contract agreement with J-ABC, J-ABC showed us the service menus and contents which were in accordance with our needs.
    (2) Before the contract, it was not possible to determine if our requested meeting arrangements would be a success or failure. However J-ABC explained in detail the methods to successful meeting arrangements and provided us with the estimated costs involved.
    After that, we were able to customize and agree to the contents of the services which J-ABC proposed, regardless of the success or failure of the meeting arrangements.
    (3) J-ABC was able to arrange all the meetings with the desired agenda within our limited time schedule in Australia. Furthermore, J-ABC organised the meetings with the right people which was key to our successful discussions.
    (4) J-ABC had a deep understanding of our discussion details and desired outcomes prior to the meetings. Hence, during the meetings, J-ABC was able to lead the discussion in the right direction and supported the discussion when it was necessary.
    (5) After the meetings, J-ABC followed up to provide the necessary information and message as was discussed during all the meetings.
    (6) J-ABC is aware of the local business practices and was able to point out the areas that we were missing. J-ABC supported us to establish the effective discussions and relationships with the Australian companies.
    (7) In regards to the consulting fee, J-ABC presented and explained the costs involved with high transparency so we could feel safe and confident.

  • Did you find or learn something through J-ABC’s service which you think is useful for your future project?

    (1) As I mentioned before, we would ask J-ABC to support our activities again should we need to organise a meeting with Australian companies that we don’t have prior contact with.
    (2) In addition, we also want to ask J-ABC to meet with the Australian company which we met before to commence and carry out discussions again on our behalf.

  • Did you find or learn something through J-ABC’s service which you think is useful for your future project?

    Fortunately J-ABC supported our discussions with Australian companies. We noticed that we might otherwise not be able to receive the feedback which we originally expected from the Australian company because we could not communicate our messages exactly without the support from J-ABC. This is not only because of the use of different language but also the difference in business practices (and cultures) which we think is our big problem. Therefore, we felt that we needed to pay more attention when we have discussions with local stakeholders in Australia.

  • What do you want to do for your project from now on?

    Moving forward, we want to deal with our project keeping in mind the feedback we learnt from our discussions studies.

  • What is the main difference between J-ABC’s consulting service and others which you have used before?

    (1) J-ABC responded to all our enquiries in relation to our requests with a thoughtful and clear explanation. We could be completely convinced to contract with J-ABC.
    (2) J-ABC was able to reduce our stress arising from the gap in different languages and business practices; something which we cannot ignore when we conduct our business in Australia.

  • What would you say to someone who may be undecided about participating in J-ABC service and consulting?

    No matter how big or small your project is, if you are looking for any business support or consulting services to do your business in Australia, we recommend you contact J-ABC first.