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Japan's J-Star buys energy savings business

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Japanese GP J-Star has acquired ESCO, an energy savings solution provider that primarily works with condominium managers, for an undisclosed sum.

The company has a nationwide sales network and strong ties to small-scale property managers, generating a lot of business through referrals. It supplies LED lights and electronic breakers, as well as related installation and inspection services. Annual sales are approximately JPY4 billion.

"As Japan faces structural problems of energy source shortages, we expect to see greater need for energy-saving solutions," J-Star said in a statement. "In such an environment, the electricity industry is in a transition period of deregulation, and the market is expected to change."

The transaction was driven by the founder wanting to realize some value from the company and also a recognition that professional management was required to help the business achieve further growth. J-Star will help ESCO adapt to the changing regulatory environment, introduce operational efficiencies, and pursue bolt-on acquisitions.

This is the seventh investment made through J-Star No.2 Investment, a (JPY20.4 billion) $205 million vehicle which reached a final close in 2013. Last week, J-Star announced a bolt-on acquisition of Sokisha Corporation by another portfolio company, insurance agency Nihon Hoken Service (NHS).

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