Advantage Partners sells stake in Japanese retailer

The Japanese firm has sold shares worth ¥10 billion in ailing Daiei to Deutsche Securities, the investment arm of Deutsche Bank.

Private equity firm Advantage Partners has sold its stake in ailing Japanese retailer Daiei to Deutsche Securities, an investment arm of Germany’s Deutsche Bank, a source close to one of the firms has confirmed.

Both Advantage Partners and Deutsche Securities declined to comment.

Though the size of the transaction was undisclosed, a Daiei statement noted that the German bank had purchased 23,292,700 shares worth a reported ¥10 billion (€81 million; $106.4 million). That investment, combined with the bank’s existing holding of 3690 shares, bumped Deutsche up to become third largest shareholder of the retail chain with an 11.7 percent stake.

Advantage Partners first invested in Daiei in 2005,  reportedly in an attempt to restructure the ailing company whose decline has been attributed by various media reports to over-expansion. No financial details of the original transaction have been disclosed.

Daiei has reportedly been operating at a loss for several years now. In 2002, the New York Times published a story outlining the company’s downfall from retail giant to a debt-ridden shadow of its former self. Earlier this year, the Japan-listed company posted on its website a loss of about ¥1.2 billion for the fiscal year ending February 2010.

Other Daiei stakeholders include trading company Marubeni and retail group Aeon. Following this most recent investment, Deutsche Securities sold about 4 million of its shares to become fourth largest shareholder of the Japanese retailer with a 9.7 percent stake.

In March, Advantage made yet another investment in a distressed company when it pumped ¥5.3 billion in partnership with Japan’s Softbank and Japanese government-backed Enterprise Turnaround Initiative Corporation into struggling mobile services company, Willcom.

Established in 1992, Advantage Partners manages assets of about ¥380 billion as of June 2009. It is currently deploying capital from its fourth buyout fund which closed on ¥215 billion.The firm has offices in Japan and Hong Kong.