CITIC scores with Japan cross-border play

The firm generated between 4-5x on its investment in Higashiyama Film  

CITIC Capital Partners has sold its investment in Higashiyama Film Co, of which it owned a 96 percent stake, to strategic buyer Otsuka Chemical, according to a statement.

Financial details of the transaction were not disclosed, but CITIC gained between a 4 and 5 times return on its investment, having invested JPY 3 billion ($26 million; €21 million) in two tranches during 2010 and 2011, a source close to the matter told Private Equity International.

Since, the firm has focused on growing the business, which makes coated films for products including flat panel displays and home appliances, redefining the company vision, developing a clear business strategy, enhancing management and improving production efficiency.

Moreover, in 2012, the company made a significant investment into developing a new manufacturing facility, which enabled it to capture surging demand in Asia, in particular from China, and take the business into its next phase of growth, according to the firm.

During CITIC’s holding period Higashiyama’s EBITDA grew by around 4 times.

“Over the past four years, we have worked closely with Higashiyama Film’s talented management team and leave the company in its next phase of growth. We are sure the collaboration with Otsuka Chemical will further add to its success,” Hironobu Nakano, senior managing director and head of Japan at CITIC, said in a statement.

“This transaction further demonstrates CITIC Capital Partners’ capabilities and commitment to providing value and returns to investors of the CITIC Capital Japan Partners fund.”

CITIC made the investment from its second Japan-focused cross-border buyout fund. The China-headquartered firm has a number of vehicles globally, with around $4.5 billion in assets under management. The firm is owned by sovereign wealth fund China Investment Corporation, Chinese conglomerate CITIC Group and Qatar Holding.