J-STAR, a Japan-based private equity buyout firm, has sold portfolio company Burn Holdings to Shinsei Corporate Investment and Creation Capital in a deal valued at around $50 million, PEI has learnt.
A source with knowledge of the deal told PEI that J-STAR is anticipating a return multiple of 8x.
J-STAR declined to comment on the deal.
J-STAR invested in Burn, a holding company which overseas several businesses including Burn Repair, HouseBox and SPEC, in May 2011 from J-STAR No.1 Investment, a 2006-vintage ¥12 billion (€86 million; $110 million) vehicle focused on healthcare, retail, transport, and telecommunications, media and technology, according to Private Equity International’s Research and Analytics division.
Burn Repair claims to be one of Japan’s largest providers of housing repair services, with 30 branches across Japan. As well as delivering repair services to homebuilders and manufacturers of construction materials, Burn Repair provides post-sale services for homes, such as inspections and adjustments, according to a J-STAR statement. HouseBox and SPEC also develop and sell repair materials and provide interior finish work.
In September 2011, the company recorded sales of ¥4.7 billion (€34 million; $43 million) and had an EBITDA of ¥200 million (€1.4 million; $1.8 million). The forecasted figures for September 2014 are sales of ¥7.4 billion (€53 million; $68 million) and EBITDA of ¥500 million (€3.6 million; $4.6 million), the source told PEI. The growth in earnings is thought to have contributed around 70 percent to the financial return.
During the holding period, J-STAR worked to improve the efficiency of operating companies and increased governance, improving the information system and analysing Burn’s profitability to ensure an increase in profit levels, the source added. Shareholders also decided to aggressively increase the company’s head count, according to the source, driving the number of employees up from 524 to 783, despite labour shortages across many parts of Japan.
Founded in 2006 as an independent Japanese firm, J-STAR has two investment vehicles. J-STAR No.2 Investment, a 2012-vintage, closed on ¥20 billion (€153 million; $201 million), above its target of ¥15 billion, according to Private Equity International’s Research and Analytics division.
In October 2012 the firm sold its majority stake in Apo Plus Station, in which it invested with funds from its first vehicle, to Tokyo-based pharmaceutical firm Qol for a return of more than 3x. In January 2013 J-STAR sold its investment in clothing company Olive des Olive in a trade sale to Japanese textile wholesaler Takisada Osaka, netting a 3x return.