J-STAR buys insurance business Sokisha

More industry consolidation is expected as Japan reforms its insurance law.

Japanese private equity firm J-STAR has bought Sokisha Corporation, a Yokohama-based insurance agency as an add-on acquisition to its portfolio company, Nihon Hoken Service (NHS).

The transaction is J-STAR’s second major deal this year, following its investment in NHS in May for an undisclosed amount.

NHS bought all of Sokisha’s shares from about 20 investors. The transaction was structured through J-STAR No. 2 Investment Limited Partnership, a 2012-vintage vehicle that raised JPY 20.4 billion.

NHS’ investment will expand its Tokyo-based business to the northern and southern areas of Japan where Sokisha has built a strong client base. In addition, the company plans to diversify its revenue stream by leveraging Sokisha’s relationships with other insurance companies and current policy holders.

According to a statement from J-STAR, the insurance industry is going through a ‘big wave of change’ with reforms to the Insurance Business Act expected next year. Tighter regulations on insurance agencies will also create more momentum for industry consolidation.

Founded in 1996, Sokisha has multi sales channels such as telemarketing, face-to-face and web marketing, and strong partnerships with other insurance companies.

In 2014, the firm netted an 8x multiple on its sale of portfolio company Burn Holdings to Shinsei Corporate Investment and Creation Capital in a deal valued at about $50 million. A month later, J-STAR sold nursing care provider HCM Holdings to Sohgo Security Services and delivered a 5.1x return and 60 percent IRR.