Advantage Partners Seeks Buyer for AM/PM Japan

Advantage Partners, a Japanese private equity firm, said on Tuesday it hopes to find a buyer for the convenience store chain am/pm Japan by September and wants to list soft drinks maker Pokka Corporation next year.

Plans for am/pm to be acquired by Lawson Inc (2651.T: Quote, Profile, Research, Stock Buzz), Japan’s second-largest convenience store chain, fell through in May over a dispute about brand names.

But Richard Folsom, representative partner at Advantage Partners said he expects “multiple approaches from a number of parties.”

“We would be pleased to see something happen by the end of September,” he told the Reuters Japan Investment Summit.

Advantage owns 92 percent of Rex Holdings Co, which runs am/pm in addition to restaurant chains and supermarkets.

Hit by weak growth due to an aging population and a mature economy, Japan’s retail industry has undergone major consolidation in recent years.

Unlike department stores and supermarkets, convenience stores are enjoying relatively solid sales as thrifty consumers are spending more time at home and shopping for necessities at nearby stores.

But analysts say the convenience store industry has to come up with new strategies given weak growth prospects.

Folsom said Advantage Partners may sell some shares in Pokka to a strategic buyer before an initial public offering, he added.

He also said he is optimistic about the outlook for the private equity industry in Japan and sees an increasing number of opportunities for his firm’s pipeline.

Private equity deals are not getting done because there is a price gap between sellers and buyers, he said, adding that a lack of bank financing for leveraged buyouts was not the cause of recent slow deal flow, Folsom said.

He said Japan’s three largest banks – Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz), Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) and Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research, Stock Buzz), as well as other financial firms are willing to lend money for the types of deals Advantage Partners is targeting, worth around 5 billion yen to 50 billion yen ($52-$524 million) in enterprise value.

Global private equity firms which target larger deals in Japan may find it difficult to complete deals in Japan as such deals are rare here.

(Additional reporting by Yumi Otagaki; Editing by Hugh Lawson)