Japan Home Centre Update

EQT Greater China II invested in Japan Home Centre in 2010 to become a co-owner alongside Hiluleka Limited, a company controlled by the Japan Home Centre business’ two founders Mr. Lau Pak Fai Peter and Ms. Ngai Lai Ha. Japan Home Centre was then a major houseware retail chain in Hong Kong with no directly-owned stores overseas. Since then Japan Home Centre has expanded both in its home market Hong Kong and overseas to become one of the leading houseware retailers in Asia.

As part of a continued growth ambition Japan Home Centre’s holding company, International Housewares Retail Company Limited (IHR), listed its shares on the Stock Exchange of Hong Kong Limited on September 25, 2013 in a successful IPO which raised approximately HKD 693 million in gross proceeds including the over-allotment option. Net proceeds to IHR is approximately HKD 462 million, of which approximately HKD 242 million is planned to be used to finance new store roll-outs.

Since EQT Greater China II came in as co-owner, Japan Home Centre has expanded into four new jurisdictions: Singapore, Malaysia, Mainland China and Macau, via add-on acquisitions or joint ventures. It has become the largest houseware retail chain, in terms of revenue and the number of stores operated in the calendar year 2012, in Singapore, with a 10.4% market share, and Macau. In its core Hong Kong market, the Japan Home Centre business continues to enjoy a leading market position with a 49% market share. Between the 2011 and 2013 fiscal years, sales grew by an average of 21% per year and EBITDA by 31%. Store network (including licensed stores) expanded rapidly from 223 stores in FY11 to 303 stores as of September 4, 2013.

“We have enjoyed very good growth and are well situated to continue our expansion, especially in markets outside Hong Kong. We also highly appreciate EQT’s value-added investing approach”, said Mr. Lau Pak Fai Peter, CEO and Chairman of the Board and co-founder of Japan Home Centre.

The IPO was oversubscribed by more than 145 times, making it the second most oversubscribed IPO in Hong Kong since the start of 2012 for fundraising size of USD50 million or above. The IPO is also EQT’s first in Asia.

Japan Home Centre offers high-quality, value-for-money products in the areas of housekeeping, plasticware, kitchenware, household electronics, interior and textile products and as of September 4, 2013, operates a total of 293 stores (excluding licensed stores) in Hong Kong, Mainland China, Singapore, West Malaysia and Macau and also runs 10 licensed stores in East Malaysia, Saudi Arabia, New Zealand, Indonesia and Cambodia. The strategy is to offer high quality, value-for-money products through a pleasant and convenient shopping environment.

Although its core customer group is middle-aged women, Japan Home Centre is also pondering plans to venture into new customer groups and product categories like men's personal and health items and offer larger variety of higher-end housewares products.

After the IPO, EQT Greater China II continues to hold a 21% ownership stake (post over-allotment option). The market capitalization of IHR on September 30, 2013 was in excess of HKD 2 billion.

“The IPO only represented a partial exit for EQT. We are pleased with how the company has grown and developed and also how EQT’s involvement has increased its value so far, and we look forward to IHR’s further development ahead as a listed company”, says Tak Wai CHUNG, Member of the Board of Directors at IHR and Partner at EQT Partners, investment advisor to EQT Greater China II.