Permira to complete exit from Japan's Sushiro with 2.9x return

Shinmei, which is also one of Japan’s largest rice wholesalers, will acquire 9.49 million shares in Sushiro for JPY4,000 apiece, generating proceeds of around JPY38 billion ($337 million) for Permira. The private equity firm made a partial exit in March through Sushiro’s IPO. The company sold 21.1 million shares at JPY3,600 apiece, with JPY68.1 billion of the JPY75.9 billion raised going to Permira.

The transaction is expected to close by the end of the fourth quarter, subject to various approvals. AVCJ was told the GP’s gross return by sources close to the transaction. Permira declined to comment on the matter.

In acquiring Permira’s 32.72% stake – which is held through Consumer Equity Investments (CEIL) – Shinmei is not obliged to try and buy Sushiro outright because an automatic tender offer is only triggered when ownership passes 33.3%. However, Shinmei, Sushiro and Genki have agreed to discuss the potential integration of Sushiro and Genki, subject to shareholder approval. Sushiro’s stock rose 4% on September 29 to close at JPY3,610.

Founded in 1984, Sushiro is a market leader in the conveyor belt sushi restaurant space, offering food of consistently high quality at a lower price point compared to traditional sushi establishments.

Permira bought Sushiro from Unison Capital in 2012 at a valuation of approximately EUR895 million ($946 million), including debt. Unison, which first invested in the business in 2007 and took full ownership a year later, said it grew store numbers, sales and EBITDA by 50%, 75% and 150%, respectively, during the holding period. For the year ended September 2011, sales reached JPY99.8 billion, up from JPY59 billion in 2007. EBITDA came to JPY8.8 billion in 2011.

At the time of Permira’s acquisition, Sushiro had 335 restaurants in Japan and had just entered Korea. It now has more than 470 outlets in Japan and eight in Korea, and claims to serve over 140 million people a year. In addition to supporting expansion, Permira claims to have installed a new leadership team, revamped the menu to include higher quality products, improved marketing and customer relationship management systems, and boosted efficiency.

Annual revenue reached JPY147.7 billion in 2016, up from JPY136.2 billion in 2015, while EBITDA increased to JPY12.3 billion from JPY10.8 billion over the same period. Net profit fell to JPY3.2 billion from JPY3.9 billion in 2015.

“This is a prime example of supporting fast-growing brands in the consumer space. Over the course of the CEIL ownership, the company has transformed into a best-in-class leader, with an enhanced focus on innovation and new product development and an expanded footprint. We wish Sushiro continuous success with its new strategic partners Shinmei and Genki,” Ryo Fujii, head of Japan at Permira, said in a statement.

The private equity firm has approximately EUR32 billion ($38 billion) in committed capital. With offices in Tokyo, Hong Kong, Seoul, and Shanghai, it has been active in Asia for more than a decade, deploying more than $3 billion. Investments have thus far come from Permira’s global funds, but the GP is said to be in the process of raising its debut Asia vehicle, which has a target of at least $1 billion.

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• Topics
• North Asia
• Trade sale
• Consumer
• Japan
• Permira Advisers
• Exit