Oji buys Paperbox from CVC

Japan's Oji Paper has bought private equity firm CVC Asia Pacific's portfolio company Paperbox Holdings for an undisclosed amount.

CVC appointed J.P. Morgan late last year to run a sell-side auction for Paperbox, Malaysia's largest manufacturer of paper board and corrugated board which started operations in 1992. CVC acquired it from Malaysian conglomerate Genting in 2007 for M$745 million ($224 million at current exchange rates). This is the second time J.P. Morgan will earn money on this asset as the US investment bank also worked with Genting when it sold Paperbox to CVC.

The private equity firm made some management changes, improved Ebitda and made the business more robust over the period it owned Paperbox, said a source close to the transaction. CVC decided last year to monetise its investment and has managed to close a deal very quickly. The asset was expected to be sold to a strategic buyer, but some private equity firms were invited to participate in the auction, added the source, who also noted that CVC earned a very healthy return on its investment.

Oji, which is the largest paper company in Japan with a 130-year history, was advised by Macquarie. The Japanese firm has been expanding overseas to participate in markets that offer higher growth than its saturated home market. Specifically it is trying to follow its customer base, thus the acquisition in Malaysia is synergetic for the firm. As the market leader in the paper board and corrugated board market in Malaysia, Paperbox provides Oji with a platform for further expansion in Southeast Asia.

This is the second private equity sell-down to a strategic buyer within one week. Indian hospital operator Fortis Healthcare bought TPG's controlling interest in Singapore-based Parkway Holdings for $686 million early last week. "We expect to see further sell-downs of portfolio companies by private equity firms through the course of this year with deal sizes mostly up to half a billion [dollars]," said a specialist.

The deal also comes within days of another Malaysia-Japan trade, but in the reverse direction. On March 8, Malaysian infrastructure and property group YTL Corporation bought Citi's 100% equity interest in Japanese ski resort Niseko Village on the island of Hokkaido for ¥6 billion ($66 million). Niseko Village occupies 617 hectares of land, comprising: 462 hectares of freehold land that houses the 506-room Hilton Niseko Village hotel, the 200-room Green Leaf Hotel and two 18-hole golf courses; and 155 hectares of leased ski mountain land with seven ski lifts and 15 ski trails. Citi bought Niseko Village in 2006 and specialists reckon it may not have made any money on the investment.