J-GIA carves out furniture business from Japan's Seven & i

Seven & i is among the growing number of Japanese companies under pressure from activist investors. ValueAct Capital took a stake in the business earlier this year and started agitating for change. The investor argued that 7-Eleven could be worth more than twice as much as its parent if Seven & i spun out the business or restructured to focus on convenience stores.

J-GIA will own 51% of Francfranc, with Seven & i’s interest falling to 23.5%. Bals International, a Hong Kong-based holding entity, will have the remaining 25.5%, according to a filing. The size of the private equity firm’s investment has not been disclosed.

A separate filing maps out the two-layer ownership structure. J-GIA will hold 73.3% of Bals International, which in turn has a 70% interest in the Francfranc Corporation, the operating business. Seven & i owns 30% of Francfranc Corporation and will retain 26.7% of Bals International.

Founded in 1990 by Fumio Takashima, a Japanese entrepreneur, Francfranc has 140 stores in Japan and eight in Hong Kong. Originally called Bals Corporation, it switched to Francfranc in 2017. Francfranc Corporation – the operating entity below Bals International – recorded sales of JPY29.9 billion ($271.5 million) for the 12 months ended August 2020.

Initiatives to be undertaken under the new management structure include digital transformation – notably by strengthening the company’s e-commerce channel and general brand development.

J-GIA was established in 2016 by Koichi Tateno, formerly a partner at Unison Capital. The firm has strategic alliances with Japan Tobacco and advertising and public relations giant Hakuhodo. It leverages their resources to support the small and medium-sized enterprises in which it invests.

J-GIA raised JPY17.3 billion for its debut fund in 2017. A successor vehicle closed at the hard cap of JPY38 billion in November 2020.

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• Topics
• North Asia
• Buyouts
• Consumer
• Japan
• activist investor
• Japan Growth Investments Alliance (J-GIA)