Tasaki & Co’s private equity owner MBK Partners is looking to collect second-round bids for the Kobe, Japan-based jewelry company, later this month, sources familiar with the situation said.

The asset attracted Asian bidders, including Chinese and Japanese private equity firms, when it collected its first rounds of bids a few months ago, they noted.

Chinese private equity firm FountainVest, and Japanese private equity firms Unison Capital and Polaris Capital Group are among the shortlisted bidders, they noted.

FountainVest and Unison Capital are believed to be seeking to tie up and co-invest in the asset, three of them noted.

FountainVest is apparently eyeing to obtain a majority stake in the consortium, however, the situation remains fluid, the first and second sources said.

The business generates revenue of around JPY 40bn (USD 267m).

It should sell at around a 10x EBITDA multiple, according to the third source.

The full-year EBITDA is about JPY 11bn (USD 7.3m) as of October- end, the fourth source said.

Daiwa Securities is running the sale process, according to the sources.

The data room has been open for several weeks, allowing ample time for the shortlisted bidders to examine given the target’s multinational presence and several other factors including concern over Tasaki’s business in Myanmar, the fifth source noted.

Tasaki’s Myanmar unit has businesses with a state-owned company that is subject to sanctions by the US government, and this is one issue that some private equity investors are closely looking into, they said.

As such, global private equity firms from the US and Europe, and Asian private equity firms backed by limited partners from Western countries shy away from the deal, they noted.

How such firms view the issue will be critical for the bidders’ decision-making process and whether they pursue the binding bids or not, according to the sources.

The majority of Tasaki’s products are produced in Japan, and its subsidiary in Myanmar does not have ties to the military, said a source familiar with the situation. The company has a long-standing license for a commercial production contract with Myanmar Pearl Enterprise, but the arrangement itself does not present a risk related to sanctions, based on the legal reviews, the source said.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed treasury sanctions on the state-owned Myanmar Pearl Enterprise (MPE), saying the pearl industry is a key economic resource for Myanmar’s military regime that is suppressing pro-democracy protests in the country, according to its press release as of 21 April 2021.

HumanRightsNow, a Tokyo-based non-governmental organization (NGO), accused Tasaki of having business with MPE and requested it to stop the business in April 2021, according to its press release.

MBK Partners acquired an 83.8% stake in Tasaki via takeover bids for JPY 25.6bn in 2017, according to Mergermarket data.

MBK, Daiwa Securities, and Unison Capital declined to comment. FountainVest and Polaris Capital Group did not return a request for comment by the time of publishing this report.

A spokesperson at Tasaki said the company had no direct knowledge of the situation.