Japan’s J-Star exits Iki Iki to Noritsu Koki Group

The deal value hasn't been disclosed but Iki Iki's EBITDA is $12.5 million and companies of this nature usually trade at a multiple of 8-9x.

Iki Iki publishes lifestyle magazines and sells related products targeted at females aged 50 years and over. According to AVCJ Research, J-Star took control of Iki Iki in March 2009 when the company was bankrupt, committing $10.5 million alongside minority stakeholder Club Tourism International.

During J-Star's ownership, EBITDA has increased from $5.8 million to $12.5 million, while net cash has grown from $2.5 million to $18.3 million. The improved performance is credited to three factors: boosting magazine subscriptions from 145,000 to 191,000; instigating stricter purchasing policies; and altering the product mix to include more higher-margin goods such as cosmetics and nutritional supplements.

Noritsu Koki built its business on photo laboratories and has inevitably been hit by the shift to digital cameras. The company has more than $300 million in cash and liquid securities and it is using this capital to diversify into areas including food and healthcare. Iki Iki is the most significant acquisition it has made so far.

This is J-Star's first exit since 2008 and the second from its current fund, J-Star No.1 Investment Enterprise, a JPY12 billion ($153 million) vehicle that closed in December 2007.

"The exit environment isn't great but it's decent," said Gregory Hara, director and president of J-Star. "About half the listed companies in Japan are debt free and have cash on their balance sheets. Excluding financial services and real estate, the cash reserves come to JPY65 trillion."

J-Star is currently in the market looking to raise a second fund of around JPY15 billion, with foreign investors expected to account for more than 50% of the corpus. The first investment under the new vehicle came in May, with the acquisition of a majority stake in Three Arrows, which makes clothing for pets.

For the Iki Iki transaction, J-Star enlisted GCA Savvian as financial advisor and Baker & McKenzie as legal advisor.

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• Topics
• Exits
• North Asia
• Consumer
• Exit
• Japan
• Consumer
• J-Star
• Trade sale