Japan's J-Star announces trio of investments

The retail acquisition is Itty Holdings, which focuses on healthy living products. The company is not unlike a TV shopping channel in its approach, identifying popular consumer product lines each season and pushing out its own copycat versions. These are distributed through e-commerce and wholesale channels. Sales are approximately $30 million a year, with a 10% EBITDA margin.

Itty releases 10 products a year, relying on one or two to generate demand that outlasts the initial peak purchasing period. The company has been in operation for nine years, proving its business model across multiple cycles through careful product selection, effective marketing, and competitive pricing. J-Star will work with the existing Itty management team on various growth initiatives.

The recycling business, Harita Metal, focuses on iron and non-ferrous metals, frequently working with clients in the automotive sector. The investment is in part a bet on policy, with the Ministry of Economy, Trade & Industry (METI) keen to promote recycling and environmental compliance among corporates. The industry as a whole is worth around $130 billion and the segment to which Harita has exposure is worth $40 billion.

Makoto Harita, the CEO and son of the company’s founder, enjoys a relatively high profile within the industry, representing Japanese recyclers at G20 meetings and providing consulting services to various companies. He will stay on in his current role with a minority stake in the business. Harita, which generates $60 million in annual revenue, is considering expansion into other recycling segments, including consumer electronics.

The final investee is Yokoi Manufacturing, Japan’s leading supplier of fire hydrants. The deal came about after company management decided that a stronger corporate framework and a global supply chain are necessary in order to maintain growth. Yokoi is one of only three players in its market segment in Japan and has sales of $60 million a year, mostly to property developers.

Financial terms of these transactions were not disclosed. The investments come from J-Star’s third middle-market buyout fund, which closed last year at the hard cap of JPY32.5 billion ($291 million. It targets control and co-control investments in companies with valuations of JPY3-10 billion.

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• Topics
• North Asia
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• Buyouts
• J-Star
• Japan
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