JIC Capital backs Japan's Hitachi Astemo

Hitachi currently owns 66.6% of Hitachi Astemo, and Honda Motor has the remaining 33.4%. A share transfer has been agreed upon that will leave them with 40% apiece, with JIC Capital holding the balance. The transaction values Hitachi Astemo at approximately JPY 437.8bn (USD 3.3bn) based on the price of JPY 657,300 per share. This implies that JIC Capital will pay JPY 87.6bn.

Hitachi Astemo was formed in 2021 through the merger of Hitachi Automotive Systems, Keihin Corporation, Showa Corporation, and Nissin Kogyo. Hitachi and Honda were the largest shareholders in Hitachi Automotive and Nissin Kogyo, respectively.

Given the ultimate objective is to take Hitachi Astemo public, Hitachi and Honda decided it would be best to grow the business as equal partners. Post-transaction, the company will no longer be a consolidated subsidiary of Hitachi, but the two parties will continue their cooperation, notably in electrification and autonomous driving, according to a statement.

Hitachi Astemo produces a range of chassis, powertrain, and motorcycle systems, and other industrial equipment. The company is pushing aggressively into the electric vehicle (EV) and connected car space, earmarking JPY 300bn for investment in the development of EV-related products through the 2025 financial year.

In addition to shifting from internal combustion engines to EV motors, inverters, and electric axles, Hiatchi Astemo is exploring integrated vehicle control technologies based on autonomous driving technology and advanced driver-assistance systems (ADAS). The software element is being addressed through Hitachi’s Lumada data platform, which operates across different business units.

The company generated JPY 1.59trn in revenue for the 12 months ended March 2022, up from JPY 987.6bn a year earlier. Operating profit rose from JPY 34.7bn to JPY 58.7bn. Hitachi Astemo was responsible for 15% of Toshiba’s group-wide revenue, while its EBITDA – of JPY 62.3bn – amounted to 12% of the overall total.

Hitachi said in its 2022 annual report that initiatives around EVs and smart car technology are expected to boost revenue to JPY 2trn in 2024, with the EBITDA margin reaching 9% compared to 3.9% in 2022.

Hitachi is notable for its commitment to a systematic divestment programme and its willingness to work with private equity. AVCJ Research’s records show that financial investors have carved out 10 assets from the company in the past 10 years. In eight other deals, the vendor was a Hitachi subsidiary. Recent divestments include Hitachi Transport Systems and Hitachi Metals.

JIC, which replaced Innovation Network Corporation of Japan (INCJ) in 2018, has JPY 3trn in investment capacity and a broad mandate to support the technology sector. In addition to making commitments to private equity funds, it makes direct investments through Venture Growth Investments (VGI) and JIC Capital.

The latter received JPY 400bn in seed capital from JIC in 2020 and is tasked with providing risk capital for the creation of new industries that can realise “society 5.0.”

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• Topics
• North Asia
• Expansion
• Industrials
• Japan
• automobiles
• manufacturing
• Japan Investment Corporation (JIC)