The Riverside Company has acquired a controlling stake in Japanese cycling retailer Y. International, according to a company statement.
The firm didn’t disclose the financial details of the transaction, but said the company falls within its usual investment range. In Japan the firm targets businesses with enterprise values of between $20 million to $60 million.
The investment is the first in Japan from its latest fund and the first it has ever made in the country’s retail sector.
Y. International is a high-end sports retailer, focusing on cycling products. The business has a broad range of products, which suits Japanese consumers who prefer to shop in areas where there is a wide selection, according to Hiroaki Wakashita, vice president at Riverside who worked on the deal.
“In the biking industry this is very difficult because the manufacturers themselves have a very selective nature of who they sell their products to and that is because they are very sophisticated products, they’re not just the $100 bikes you see in everyday stores and they could be dangerous at times because they go at very high speeds,” he told Private Equity International.
Riverside will get seats on the company board, which it can fill with firm members or outside experts. It has a number of candidates but is yet to finalise the names, Wahashita said.
He adds that Japanese companies are becoming more demanding when it comes to firms offering operational expertise post-investment.
“The companies that are out to sell are looking for more. This is less in terms of economics, but it is more in terms of value-add that the private equity firms can provide. Many can provide the capital but what is the value-add beyond that? Especially in a market like Japan where not many industries are growing, a lot of companies are looking for assistance or help grow their business overseas.”
Riverside is a global mid-market firm and has recently bolstered its Asia Pacific capabilities.
In March 2013 the firm opened a Singapore office to assess opportunities in the Southeast Asian region for the first time, PEI reported earlier. Riverside appointed Ivica Turza to managing director and head of deal origination Asia Pacific, who will head the Singapore office.
The firm is currently raising its second private equity vehicle for Asia Pacific which has so far garnered $115 million toward its $150 million target, according to a source close to the firm. Riverside declined to comment on fundraising.