D Capital agrees Japan digital marketing carve-out

The divestment coincides with the signing of a restructuring support agreement – which will reduce Catalina’s debt load and enable the company to strengthen its balance sheet – and a voluntary filing for bankruptcy protection. Only the US operations are subject to the restructuring; Catalina’s businesses in Japan, Europe, and Costa Rica are not affected.

Founded in 1983, the company collects data on shoppers in real time, converts it into market intelligence and analytics, and helps retailers and consumer brands develop customised advertising campaigns. It claims capabilities in media planning, execution, and measurement across in-store, television, radio, and digital platforms, delivering USD 6.1bn in consumer value annually.

Catalina was taken private by Hellman & Friedman in 2007 at a valuation of USD 1.7bn. Six years later, Berkshire Partners acquired a controlling stake in the company.

By the end of 2018, Catalina was carrying nearly USD 1.9bn in debt, including a USD 1bn first lien term loan due in 2021, Debtwire, AVCJ’s sister title, reported. The company filed for bankruptcy with a pre-packaged restructuring plan. Berkshire held 41% of the equity at the time.

FTI Consulting, Catalina’s financial advisor during the process, noted there had been a failure to capitalise on rising demand for digital advertising and a simultaneous “precipitous decline” in non-digital revenue as physical retailers reduced their footprints. Revenue began to fall in 2017, exacerbating the pressure caused by several debt facilities nearing maturity.

Catalina “has successfully transformed into a data-driven, omnichannel media platform” over the past few years, according to a statement on the restructuring and Japan divestment. CEO Wayne Powers said it would allow Catalina to pursue growth through artificial intelligence-enabled data science capabilities, including personalisation, measurement-as-a-service, and full-funnel marketing solutions.

"Our business in Japan is performing well with a strong network of valued retailers and continues to attract leading Japanese brands with our highly targeted solutions,” he added.

“With a strong team and a separate set of customers from the rest of Catalina's business, this transaction will enable our operations in Japan to benefit from D Capital's digital transformation expertise and commitment to grow in the Japan market – and to move forward as a standalone business that is well-capitalised and well-positioned for success in its unique market."

D Capital, formed in 2021 through a spinout from Unison Capital, positions itself as a digital transformation specialist. The firm is led by professionals with expertise in this field as well as experience in private equity investment. Last October, D Capital achieved a third close of JPY 27bn (USD 186.4m) on its debut fund, which has a target of JPY 30bn.

It invests in companies – in areas like healthcare, consumer, and manufacturing – with enterprise valuations of around USD 100m. Cheque sizes are in the USD 3bn range. The portfolio includes multimodal transport provider FC Standard Logistics, furniture retailer Francfranc, and snack maker Oyatsu Company.

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• Topics
• North Asia
• North America
• Buyouts
• Restructuring
• Consumer
• Media
• Japan
• D Capital