Deal focus: CLSA tools up with Astro Products deal

This month CLSA has returned to the automotive space and the firm has not traveled far for its next deal. The latest target, automotive tools retailer Worldtool, is also based in Saitama, a 15-minute drive away.

"We got to know the company through BCN, which was a client of the company," explains Yasunori Maeda, a senior vice president with CLSA in Tokyo. "The two companies operate in a similar business area, so we decided we could leverage an existing relationship in our portfolio."

Operating under the brand name Astro Products, the company claims to be the largest specialty retailer in its segment in Japan, selling own-branded tools as well as major national brand products through a network of 140 stores. In addition to auto service tools, Worldtool sells general industrial tools, LED lights, solar panels, and electric generators.

Worldtool's founder and president, Tsutomu Nakajima, had been looking for partner to help expand his company outside of Japan and eventually take it public. CLSA is understood to have acquired a stake of 56-58% with the balance retained by Nakajima and a group of employee shareholders. The size of the investment was not disclosed.

Maeda likens Worldtool's business model to the SPA (specialty store retailer of private label apparel) approach adopted by clothing retailers such as Uniqlo, but for the auto tool retail space. This means the company has a range of own-branded products sold exclusively through its stores with production outsourced to third-party manufacturers in Asia.

"It has a unique position in the market and it has high growth potential," says Maeda. "Traditionally the maintenance tool market in Japan was driven by pure manufacturers, pure wholesalers and pure retailers. This company is the first to bring a fully integrated value chain model into this market, so it is actually leading growth in this space."

Worldtool currently has about 730 employees and its sales for the 2014 financial year came to approximately JPY6 billion. According to CLSA, the company has seen compound annual revenue growth of 20% over the past five years.

In addition to pursuing growth in Asia - in particular Southeast Asia - CLSA also plans to expand the company's domestic footprint. There are also opportunities for synergies between Worldtool and BCN. "They share a pretty similar customer base - which is used and new car dealers - so we will be able to pursue joint marketing efforts," Maeda adds. "There is also potential to expand into the B2B market where BCN's clients are potential clients for Worldtool."

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• Topics
• North Asia
• Consumer
• Support services
• Expansion
• Restructuring
• CLSA Capital Partners
• Japan
• automobiles
• Consumer
• Growth capital