Deal focus: CITIC tries Mark Styler on for size

Japanese fashion labels have been keen to grab a slice of this market, and a number of brands have made their first forays into China with private equity backing.

Recent examples include womenswear label Olive des Olive, which J-Star shepherded through a period of China expansion before exiting to Takisada-Osaka in 2013. The same year, Baroque Japan was sold by CLSA Capital Partners to CDH Investments and Chinese women's shoe retailer Belle International in a bid to boost the brand's presence in the country.

Japanese apparel brand Mark Styler, acquired last week by CITIC Capital, continues this trend. The financials of the deal were not disclosed, but the transaction falls within the typical range of CITIC's $217 million Japan fund: between JPY3 billion and JPY10 billion ($25 million and $83 million).

"Consumer goods - particularly Japanese brands - has been one of the key focus areas in our investment strategy," says Jessica Zhang, executive director for CITIC Capital's Japan PE team. "As consumer demand among the emerging middle class has risen, so has the desire for high-quality Japanese products."

Set up in 2005, Mark Styler has a portfolio of 17 women's fashion labels including MercuryDuo, Emoda, Dazzlin, Murua, and Ungrid. It also operates a network of 170 own-branded stores and has its own e-commerce portal, Runway Channel. The company is understood to have generated JPY37 billion in revenue for the 2014 financial year.

"The target segment market is young women in their 20s but within that group each brand has distinct characteristics, and targets a unique segment," explains Zhang. "So the company is competitive in each specific segment."

Mark Styler has sold its products Singapore and Hong Kong through local suppliers. In China the plan is to expand in the business further by opening branded stores in tier-one and tier-two cities, not just under Mark Styler name, but under each of the company's flagship brands.

"The strength of this company is that it is good at managing its brand portfolio and it is very good at creating new brands in Japan," says Zhang. ‘So there are still niche market segments where there are opportunities for this company to be innovative and find growth in Japan."

However, she adds that the growth opportunities go beyond opening physical stores and expanding the brand portfolio. A large part of the company's future strategy will involve its online business. "The company's e-commerce business is already getting very good traffic from their target consumers and this is likely to be a strong driver of growth," she says.

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• Topics
• Buyouts
• North Asia
• Greater China
• Consumer
• buyout
• Japan
• China
• Consumer
• CITIC Capital