Olympus Capital, an Asia-focused private equity firm, is investing ¥8 billion ($67 million; €49 million) for a one-third stake in Kyoto Kimono Yusen, a Tokyo-listed kimono retailer that has fifty-three shops across the country.
The transaction price is at a 20 percent premium to Kyoto Kimono’s share price prior to the listed company disclosing the deal on 8 May.
Olympus is buying the majority of shares held by the founding family members of Kyoto Kimono, according to Naoro Obama, a managing director of Olympus in Tokyo.
The price is a 17 times multiple of the earnings of Japan’s fifth largest kimono company, Obama told PEO. The company’s revenue for the fiscal year ended March 2007 was about ¥16 billion and EBITDA was about ¥2.5 billion. Even though the group’s profit fell 23 percent from a year ago, Kyoto Kimono “remains more profitable than its rivals.”
Obama added that Kyoto had a “differentiated business model” which gave it a competitive advantage over its rivals in a shrinking industry that is highly fragmented.
Olympus, which will be represented on the company’s board, wants to implement a “scientific methodology” in Kyoto’s marketing efforts. It also intends to hire senior marketing executives to improve Kyoto’s reach to its target audience.
Obama said Olympus identified Kyoto Kimono through “his personal network.” In Japan, Olympus seeks to provide solutions to mid-cap companies which may be facing succession issues.
Kyoto Kimono president Yuki Kawabata, who is a member of the founding family, will step down and be replaced by Shinji Saito, a company director and the head of corporate planning, effective 21 June.