J-STAR in 3x exit of cross-border business

The Japan-focused, small cap buyout firm said it will exit an investment in a Japanese clothing company that has a presence in China.

Tokyo-based J-STAR has revealed it will exit its investment in Olive des Olive, a branded clothing company, in a trade sale to Takisada Osaka, a Japanese textile wholesaler.

J-STAR has signed a stock purchase agreement with Takisada Osaka, Gregory Hara, president and CEO of J-Star, told Private Equity International.

He said other bidders included mid-market GPs in Japan who have a strategy to take Japanese companies into overseas markets. “This was the best candidate for them because we have already set up the base,” he said.

Hara declined to disclose financial details. However, a source close to the deal said the exit has an ROI just over 3x.

The initial investment in Olive des Olive was made in May 2009 and an additional investment was made in 2010 to facilitate the acquisition of a Shanghai subsidiary, Hara added.

The investment strategy was “to gain firm and stable cash flow from the Japanese market while seeking growth in emerging countries in Asia”, Hara said.

During the holding period, the number of stores in China were increased to 116 from 35, according to the firm. J-Star also helped the business increase e-commerce sales to 150 million Japanese yen (€1.2 million; $1.7 million) from zero in 2009.

According to PEI’s source, EBITDA grew about three times to 600 million yen.

Last September, J-STAR exited Japanese mail order business Iki Iki in a $100 million trade sale and in October the firm sold its majority holding in Apo Plus, a medical services business, two years after its original investment in the company, PEI reported earlier.

Gregory Hara, Founder and CEO of J-Star, will share case studies of his firm's 2012 exits at the PEI Asia Forum in Hong Kong, 20-21 March.