Japan energy solutions buyback continues J-Star's exit run
J-Star, a Japanese lower middle-market GP, has announced its third liquidity event in the space of a week with the exit energy savings solutions provider ESCO via a buyout by company management.
The size of the transaction was not disclosed. J-Star acquired ESCO in 2015 through its second fund, which invested companies with valuations in a range of JPY1-10 billion ($9.7-97 million). At the time, the company was generating about JPY4 billion in annual sales and less than JPY4 million in EBITDA.
ESCO works with small-scale property managers, installing LED lights and electric breakers, as well as providing related installation and inspection services. J-Star believed it was the only company of its kind in Japan focusing on smaller buildings with lower-voltage systems.
The expectation was that ESCO could benefit from increased consumer awareness of efficiency issues and the deregulation of Japan’s JPY7.5 trillion retail electricity market. The latter development would allow households to choose their preferred supplier based on price and service quality, leading to increased competition.
J-Star said in a statement that nearly 30,000 facilities – chiefly condominiums – had adopted ESCO’s solutions as of December 2020. Further, the private equity firm claims to have helped ESCO stabilize its management foundation and build a sustainable business model, noting the structural challenge Japan faces in terms of energy shortages.
Energy prices reached an all-time high earlier this week as a result of cold weather and limited supplies of liquefied natural gas, of which Japan is a major importer. Following the Fukushima disaster in 2011, the country started to ease its reliance on nuclear power, which contributed to an increase in household electricity bills.
J-Star’s other exits were healthcare coverage specialist NHS Insurance and fire safety equipment supplier Yokoi Manufacturing. These investments were from J-Star’s second and third funds, respectively. Both were trade sales. The private equity firm is currently deploying its fourth fund, which closed at the hard cap of JPY48.5 billion in 2019.
More on North Asia
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.