J-STAR drives healthcare in Japan
In a deal that displays PE's ability to drive sector change in Japan, and that highlights the continuing buoyancy of the local mid-market, J-STAR Co., Ltd. has bought out Apo Plus Station Co. Ltd., a privately-held medical solutions company, in an MBO.
The deal value was not disclosed, but an industry figure close to the acquisition pegged it at around JPY1.6 billion ($19.2 million). With the consent of Tsuneko Hibino, CEO of Apo Plus, J-STAR obtained substantially above two thirds of the entire share capital. Risona Bank, a Japanese lender, will provide 60% of the LBO capital.
The unlisted company was owned by 85 individual investors, with around 30-40% of the shares held by several VCs and angel investors. Following the ownership transfer to J-STAR, Apo Plus will be managed by a new company called Medical Solutions Co., Ltd. under the current CEO and other company personnel, who still own a substantial portion of shares. Hideaki Sakurai, Director and Partner at J-STAR, and partner Tatsuya Yumoto will be appointed to Medical Solutions as non-executive directors.
Founded in 1993 in Tokyo, Apo Plus Station has four core businesses: Contract Sales Organization (CSO), personnel deployment, medical representative training and a medical dispensing pharmacy service. The company originally planned to list on the Tokyo Stock Exchange last year, but with the volatility in the public market it opted instead to find an investor that could add value to its current business model.
J-STAR partner Yumoto told AVCJ, “in the US and Europe, this type of services outsourcing solution is already the dominant business model in the medical market, and we believe that the needs of the business will increase further.” He added that there is potential to increase sales by working with pharmaceutical companies, which could outsource the sales of their non-core medicines to businesses with the knowledge and manpower, like Apo Plus. The PE firm will also help the company roll up other businesses in the sector through new acquisitions.
In Japan, about 23% of the total population is now over 65 years old, and demand for medical and healthcare support services is increasing. Private equity players AVCJ spoke with said that one of the most attractive investment segments in the Japanese market is indeed medical and healthcare.
With that in mind, there are still obstacles. One player told AVCJ, “Investors are expecting to see returns from their investments, but the stock market has not recovered its lost value. I think that we still need longer to see the IPO market recovering in Japan.”
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