CDH to make partial exit through Baroque Japan IPO

The company said in a filing that it would sell 11.99 million shares for an indicative price of JPY2,240 apiece, plus an overallotment of 1.79 million shares. The offering includes 7.79 million shares held by existing investors, with CDH planning to sell 1.95 million shares. Belle-controlled Mutual Crown will offload 2.72 million shares, with Orix and Baroque founder Hiroyuki Murai selling 2.54 million shares and 569,000 shares respectively.

Baroque was founded in 2003 and CLSA Capital Partners backed a management buyout of the business four years later. Orix took an equity interest in 2010, gaining a 29.9% stake to leave CLSA with 54.96%, while Murai and other management team members owned 15.14% between them. Over the next three years, Baroque's footprint expanded to nearly 350 stores.

CDH and Belle - the GP is a long-time backer of the shoe retailer, having taken it public in 2007 - took control with a view to accelerating growth in China. They picked up CLSA's entire stake; CDH put in $67.72 million for 23%, while Belle contributed $93.96 million and got 31.96%. The IPO registration document indicated that Belle now owns 29.77% of the business, while Orix has 27.86% and CDH has 21.43%.

As of January 2016, Baroque had 336 stores in Japan - about three quarters of which are directly-owned - compared to 328 in 2013. The big change has come in the company's overseas business, where the number of outlets has risen from 29 to 143. Seven of these are based in Hong Kong and Macau, all run on a franchise basis, while the rest are in mainland China, operated through three joint ventures.

Baroque recorded sales of JPY68.8 billion for the 12 months ended January 2016, up from JPY62.5 billion the previous year. Net income grew to JPY4.21 billion from JPY1.86 billion over the same period.

Based on the indicative price, the IPO - for which Daiwa Securities is the lead underwriter - will give Baroque a market capitalization of JP79.5 billion. The stock is scheduled to begin trading on November 1.

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• Topics
• North Asia
• Greater China
• IPO
• Consumer
• Japan
• China
• CDH Investments Management
• Exit