Japan Home Shield mulled as non-core divestiture candidate by LIXIL – sources

28 August 2020 - 10:11 am UTC


LIXIL, the Tokyo-headquartered building materials and home equipment manufacturer, is mulling the potential sale of its Tokyo-based geotechnical investigation business Japan Home Shield Corporation, three sources familiar with the matter said.

 

The wholly owned business is non-core for LIXIL, the first source familiar noted. In the ground surveying sector, there is no dominant player and instead there are many small companies scattered across Japan. Japan Home Shield is one of the larger players in this industry and perhaps one of the few with nationwide coverage, he noted.

 

Japan Home Shield may have EBITDA of about JPY 1bn (USD 9.4m), the second source familiar noted.

 

An industry banker noted private equity firms should have some interest as well as strategics, such as Nippon Kanzai [TYO:9728]. This is because Nippon Kanzai runs public facilities and the ground investigation operation could help ensure the safety of their buildings. A second industry banker also pointed to Recruit Holdings [TYO:6098] as among potential suitors. Recruit Holdings has a real estate operation, and Japan Home Shield could complement it, he added.

 

Japan Home Shield is a wholly owned subsidiary of LIXIL Living Solution, which is in turn a 100% owned subsidiary of LIXIL.

 

Japan Home Shield posted overall revenue of JPY 11.8bn and profit of JPY 601.8m for the year ended March 2019, according to credit data from Teikoku Databank. This compared with JPY 11.1bn and JPY 661m, respectively, recorded in the previous year.  

 

Japan Home Shield was established in 1990. It is involved in geotechnical investigation and reinforcement, geological surveys, and home inspections. The company has 288 employees and has 86 branches, sales offices, and franchise offices nationwide.

 

Japan Home Shield established Tokyo-based joint venture entity First Inspection Service with Tokyu Livable, a subsidiary of Tokyu Fudosan Holdings in July 2018. Japan Home Shield owns a 66.5% stake in the JV, while Tokyu Livable owns a 33.5% stake.   

 

LIXIL declined to comment. A spokesperson from Japan Home Shield Corporation said she had no knowledge of the situation.