Private equity firm and management of tableware company to take 90pc stake
Citic Capital Partners, a private equity arm of mainland state conglomerate Citic Group, will lead a management buyout of Japanese tableware firm Narumi China before it prepares for a listing in the next three to five years.
Citic Capital and Narumi management will purchase 90 per cent of the Japanese firm from Sumitomo Metal Industries, which will retain a 10 per cent stake for the next two years. The deal is expected to be completed next month.
The price for the 90 per cent stake is 10 billion yen (HK$666.3 million), according to Nikkei.
Citic Capital would own a majority of Narumi, sources said.
The deal is the third management buyout of a Japanese firm sponsored by Citic Capital after beverage firm Pokka Corp and Shinwa International Holdings, a car audio component manufacturer.
The mainland company intended to help Narumi access the imported porcelain market in China, which was growing at 35 per cent a year, Citic Capital said. The mainland tableware market is estimated to be worth hundreds of millions of US dollars annually.
Narumi, the second-largest supplier in Japan of western-style tableware after Noritake, reported a 650 million yen pretax profit on turnover of 11 billion yen for the year to March.
The mainland is a relatively small part of its business.
'Narumi aims to list within three to five years,' president Takasuke Kurahashi said. 'Through this partnership with Citic Capital Partners we will execute a proactive investment programme focused on realising new business opportunities and growth in Japan and overseas.'
One of Citic Capital's major shareholders is Citic Group's Hong Kong-listed financial services unit, Citic International Financial Holdings.
'Citic Capital Partners will support Narumi's IPO plans, as IPO is a good exit strategy,' said a market source.
Narumi's operations have few synergies with Sumitomo Metal Industries, a Japanese metals conglomerate.
At the same time, Narumi had 'ambitious growth plans that require significant investment'.
'An attraction for Narumi is the network of Citic Group. Citic Capital Partners offers a business network throughout China and other Asian countries,' Narumi said.
Narumi would leverage its partnership with Citic Capital Partners to expand sales to hotels and department stores in China, Southeast Asia, Middle East and India, it said.
'We see tremendous growth potential for Narumi, particularly in China,' Citic Capital managing partner Brian Doyle said.
'We look forward to working closely with Narumi management to leverage our resources in Asia to accelerate their growth.'
Citic Capital also plans to expand Pokka and Shinwa's business in China.
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