J-STAR books 5x on first exit from second fund – Exclusive

The Tokyo-based private equity firm sold its stake in document scanning company Primagest to ORIX, in a transaction that would return almost 65 percent of the capital of J-STAR No. 2 to its LPs.

Japanese mid-market firm J-STAR has sold its entire shareholding in document scanning company Primagest to financial services group ORIX Corporation, generating a 5x gross return multiple on its investment and a gross internal rate of return (IRR) of more than 50 percent for its investors, Private Equity International has learned.

The sale marks J-STAR’s first exit from J-STAR No. 2 Investment Limited Partnership, its second vehicle, which closed on ¥20.4 billion ($180 million; ¥160 million) in May 2013.

The exit has returned close to 65 percent of the capital to its limited partners, a source with knowledge of the matter told PEI.

The Tokyo-based firm acquired the company in October 2013 for an undisclosed sum with the aim of de-leveraging the capital structure of the company and buying back shares from previous management. During its almost four-year hold period J-STAR installed a governance system which provided a more stringent checking system in terms of the company’s project sales.

Primagest offers image information solutions, digitising documents and records using high-speed image scanners. The company, whose main clients include financial institutions and logistics companies, also develops hardware and software, and provides outsourcing and consultancy services.

J-STAR is currently deploying its latest mid-market vehicle, J-STAR No. 3 Investment Limited Partnership, which closed on over ¥33.25 billion in April this year. Capital from the fund has been invested in veterinary clinic Fuji Field and tutoring service company Alpha Corporation.