
KKR takes out Rakuten's stake in Japanese retailer Seiyu

KKR has increased its stake in Japanese supermarket operator Seiyu to 85%, having taken out a position held by local e-commerce giant Rakuten, which supported the private equity firm’s carve-out in 2020.
The original deal, which valued Seiyu at JPY 172.5bn (then USD 1.6bn), saw KKR acquire 65% and Rakuten take 20%. Walmart, the original owner, retained 15%. They planned to reposition the company as an omnichannel retailer with a stronger online presence. Rakuten already had an alliance with Walmart covering online grocery delivery and distribution of e-books.
Rakuten said in a filing that it would sell its interest to KKR for JPY 22bn (USD 162m), which implies a JPY 110bn valuation for the overall business. This could rise if unspecified conditions are satisfied.
The filing added that the owners have “realised achievements in the key indicators of Seiyu’s market share, customer satisfaction, associate (employee) satisfaction, and financial performance.” The decision to sell followed a review of Rakuten’s “optimal asset portfolio composition.”
The announcement coincided with the release of Rakuten’s financial results for the three months ended March 2023. The company posted year-on-year gains for revenue, EBITDA, and number of monthly active users. However, investments in its mobile business, including the installation of base stations, led to declines in operating income and net profit.
A separate statement noted that, since the buyout, various initiatives have helped deliver greater value and convenience at Seiyu. These included introducing cashless payment to Seiyu stores, including Rakuten’s mobile payment app, its pre-paid e-money cards, and its loyalty programme; improving product quality and selection; optimising store operations; and enhancing online-to-offline offerings.
Tsuneo Okubo, president and representative director of Seiyu, said that operating income rose 50% year-on-year for the 12 months ended March 2022. He cited this as evidence that the transformation programme is progressing well, with Seiyu still committed to its goal of becoming Japan’s leading supermarket and online supermarket by 2025.
“We are pleased to deepen our relationship with Seiyu, an iconic Japanese brand in which we continue to see strong promise,” said Hiro Hirano, co-head of Asia Pacific private equity and CEO of Japan at KKR.
“We look forward to unlocking the company’s full potential through the continued strategic partnership with Rakuten and Walmart, which brings together our respective expertise in investing behind a company’s growth, global best-in-class practices, and thoughtful customer experience.”
Established in 1963 by Seibu Department Stores, Seiyu operates through supermarket and hypermarket formats, as well as through Rakuten Seiyu Netsuper, the delivery service joint venture with Rakuten. The company previously launched Muji as an own-label brand, spinning it out in 1990.
Walmart took a minority stake in Seiyu in 2002 and moved to majority ownership three years later. The company was delisted in 2008 and became a wholly-owned subsidiary of Walmart. Prior to the KKR deal, Walmart said it had a long-term plan to take Seiyu public again.
As of May 2023, there were 326 stores nationwide, down from 333 at the time of the sale and 431 in 2015. Most of these stores are operated on a franchise basis.
KKR is acquiring Rakuten’s stake in Seibu through its fourth flagship pan-regional fund, which closed on USD 15bn in April 2021.
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