Integral agrees carve-out of Japanese refrigerator supplier

The private equity firm will pay JPY39.8 billion for Sanden Retail Systems Corporation and assume responsibility for JPY10.2 billion in debt, according to a statement. The parent company – which will retain a 20% interest in Sanden Retail – decided to sell in order to focus on its core automotive components business and invest in serving the growing electric vehicle market.

At the same time, Sanden Holdings recognized that the retail systems industry is also changing. Sanden Retail needs to push into areas such as automated stores and multi-module vendors (MMVs), while developing new products to meet the needs of restaurants and logistics providers. It also believes there is untapped demand in overseas markets for Sanden Retail’s cold chain systems.

Helping Sanden Retail adapt to its evolving opportunity set required additional financial and operational resources. Sanden Holdings concluded that it could not commit capital expenditure to both the automotive components and retail systems businesses.

The company already sells refrigerators and freezers to customers in the US, Europe and Asia, as well as Japan. Integral said in a separate statement that Sanden Retail is the domestic market leader, thanks to its high-quality manufacturing, products that use environmentally-conscious natural refrigerants, and a nationwide installation and maintenance network.

The private equity firm will assist the existing management team – which will remain under the leadership of CEO Masuya Mori – on product development. MMV is expected to be a focus area as unattended retail sales and automated management of equipment and supplies become more prevalent in Japan.

Sanden Retail generated JPY53.7 billion in sales for the 12 months ended March 2019, up from JPY51.8 billion a year earlier. Over the same period, net income fell from JPY531 million to JPY311 million.

Integral is currently deploying its third Japan mid-market buyout fund, which closed at JPY73 billion in 2017. The firm differs from most other Japanese GPs in that it puts balance sheet capital – referred to as “deal-inducing investment” – into transactions alongside fund capital.

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• Topics
• North Asia
• Buyouts
• Industrials
• Japan
• Integral Corp.