Permira buys Japan’s Sushiro from Unison

Last Friday, Permira threw its weight behind the trend, announcing the acquisition of AkindoSushiro, a leading sushi restaurant chain, from Unison Capital for $1 billion. It is Japan's biggest private equity deal this year after Bain Capital paid $1.3 billion in June for television shopping firm Jupiter Shop Channel - another example of a buyout firm looking to take a consumer brand into Asia's emerging markets.

Now 30 years old, Osaka-based Sushiro ranks number one by revenue in the revolving sushi restaurant space with over 330 outlets in the country. For the year ended September 2011, its revenue reached JPY99.8 billion, up 69% from JPY59 billion in 2007, when Unison first invested. In December, the sushi giant made its first foray overseas, opening an outlet in Seoul.

"There has been a strong growth in Japan but we believe there are also opportunities in new markets where we see strong demand for such dining experience - China and Korea in particular," Alex Emery, partner and co-head of Asia at Permira, tells AVCJ. "Sushiro may need to hire more people to expand its presence there and we can help."

Sushiro's existing management team will remain intact, including CEO Kenichi Toyasaki, while Permira will leverage its global expertise to seek business partners and hire new managers from markets outside Japan.

The company is one of string of buyouts that took place prior to the global financial crisis that are now being primed for exit. Unison first backed Sushiro in August 2007, taking a 17.3% stake for JPY4.6 billion ($58.5 million). A follow-on investment of JPY13.56 billion came in September 2008, which took Unison's holding to 64%. Five months later the private equity firm launched a tender offer to acquire the remaining 36% for JPY7.7 billion. Sushiro was delisted in April.

"As the public market valuations are not high currently, there have been quite a number of take-private by Japanese founders in the last couple of years," Emery says. "This creates opportunities for private equity investors as an alternative source of capital, especially when these companies are large and often offer controlling stakes."

The investment will be channeled through Consumer Equity Investments (CEIL) - an Ireland-incorporated vehicle backed by Permira Fund IV - and about half the deal will be financed through debt.

Emery adds that re-listing Sushiro remains a medium-term option. "Despite the fact that valuations in Japan today are not as high as what you can observe in other markets, this could be changed when we get into the time of exit, after a typical investment period of five years," he says.

Sushiro is Permira's second investment in Japan following the acquisition of ArystaLifescience, a leading global agrochemical business, from Olympus Capital and its co-investors for $2.13 billion in 2008.

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• Topics
• Secondaries
• North Asia
• Buyouts
• Consumer
• Consumer
• Japan
• Secondaries
• buyout
• Permira Advisers
• Unison Capital