Permira Seeks Billion-Dollar Deal as Japan Turns to Health Food

  • Shift in Japanese diets presents opportunity for dining chains
  • European buyout firm sees rising demand for safe food choices

An older and more discerning Japanese population is presenting restaurant chains with new growth opportunities as they cater to increasingly health-conscious consumers, according to the local chief of buyout firm Permira Advisers.

The European private-equity firm wants to capitalize on that trend and is looking for an investment in the country’s food and health-care industries that could be worth “a few billion dollars,” Managing Director Ryotaro Fujii said in an interview this month. Permira is interested in Japan’s restaurant sector “across the board,” he said.

“There’s rising demand for safe and healthy food with reasonable prices,” said Fujii, a former Goldman Sachs vice president and Japanese finance ministry official.

Permira, which has about 25 billion euros ($27.5 billion) under management, bought Japanese conveyor-belt sushi chain operator Akindo Sushiro in 2012 for 895 million euros. Its only other investment in the country was Arysta LifeScience Ltd., a producer of agricultural chemicals it bought in 2008 and sold last year to Platform Specialty Products Corp.

Changing Diets

The private-equity firm was named by the Nikkei newspaper in January as one of the potential bidders for a stake in McDonald’s Corp.’s loss-making Japanese arm. Fujii declined to comment when asked if Permira is considering buying a stake in the business.

Some restaurants will benefit as Japanese diets and dining styles shift, according to Fujii. The changes could allow some eateries to better compete with the local convenience-store chains, such as Lawson Inc. and Seven & i Holdings Co.’s 7-Eleven, that dominate the fast-food market by selling a wide variety of hot meals.

“There are chances for private equity funds to succeed in Japan’s food service industry, because they have a good track record,” Seiichiro Samejima, an analyst at Ichiyoshi Research Institute Inc., said by phone.

Fresh Sushi

Permira’s investment in Sushiro “was a successful case,” because the company can serve sushi whose freshness and quality many convenience stores might not be able to replicate easily, Fujii said.

Consumers have started demanding healthier foods. The Japanese market for “naturally healthy packaged food” grew 37 percent in the five years through 2015 to 392.6 billion yen ($3.5 billion), data from researcher Euromonitor International show. The segment, which includes fruit snacks, soy products and granola bars, is forecast to grow another 19 percent by 2020, according to Euromonitor.

“You can’t go against the big trends,” according to Fujii, who said in August he also wants to invest in companies in the information technology, recruitment and fitness sectors. “It’s tough if a company can’t cope with the changes. The key is how you do it.”

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