Longreach sells Japanese jeweler to Integral

Integral, which closed its fourth mid-market buyout vehicle last month at the hard cap of JPY123.8 billion ($1.2 billion), typically writes equity checks of JPY3-10 billion for companies with JPY10-30 billion in enterprise value.

Longreach acquired Primo from Baring Private Equity Asia in early 2015 for JPY20 billion. Baring acquired the company for an undisclosed sum in 2011 from local GP Risa Partners and a private equity unit of Goldman Sachs Japan among others. Goldman paid about $45 million for a 66.5% stake in 2007.

Longreach’s holding period was marked by an ambitious Greater China expansion. At the time of its investment, Primo had 76 stores in Japan, 10 in Taiwan, two in Hong Kong, and had yet to enter mainland China. The company now has 88 stores in Japan, 11 in Taiwan, four in Hong Kong, and 15 in mainland China.

The private equity firm spent six months drawing up and market testing an entry plan for the country. It concluded that Primo should focus initially on the Shanghai and Hangzhou area, where consumer sophistication was high, and the allure of a distinctly Japanese brand was strong. These markets formed a beachhead for a broader China rollout.

There was also a strong focus on building out online marketing and e-commerce capabilities tailored for each overseas market. “Throughout these expansions of the Primo business, Primo’s brand quality, cost efficiencies and profitability were also enhanced, leaving the company strongly positioned for continued growth,” Longreach said in a statement.

Founded in 1999, Primo is said to be the largest player in Japan’s bridal jewelry segment. It focuses on custom orders via four engagement ring brands: I-Primo, Selexia, Promije, and Lazare Diamond. Overall sales came to JPY20.7 billion in 2019, up from JPY18.1 billion in 2015.

Integral said it planned to make use of its dedicated corporate value enhancement team to further expand the company, including the overseas footprint. Naoki Sawano, president of Primo, will continue to lead the business.

Integral has a history of secondary buyouts, having acquired telemarketing operator Customer Relation Telemarketing from Advantage Partners in 2017 for an undisclosed sum. The company went public last year as Direct Marketing Mix, with Integral receiving JPY19.6 billion in proceeds and retaining a 48.9% stake.

Longreach invested in Primo via its second fund, which closed at $400 million in 2012. Previous exits from the vehicle include Sol-Plus, a precision manufacturer that was sold to Abico Group, and Nippon Outsourcing Corporation, which was acquired by Fuyo General Lease.

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• Topics
• North Asia
• Consumer
• Exits
• Trade sale
• Buyouts
• Japan
• The Longreach Group Limited
• Integral Corp.
• e-commerce