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Flurry of asset sales in Japan as firms hit by Covid-19 shore up books

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TOKYO – Japanese railway giant Seibu Holdings struck a deal to sell part of its hospitality portfolio to Singapore sovereign wealth fund GIC this month, becoming the latest in a series of companies to recently offload their secondary assets.

This trend has been particularly acute in sectors that are the hardest hit in the prolonged Covid-19 pandemic, such as transport.

It also comes as conglomerates shift their focus to their core businesses, while seeking to improve their financial standing by streamlining assets as they secure funds for future investments. This has led to a flurry of activity in a red-hot transactions market.

In a statement on the deal valued at 150 billion yen (S$1.76 billion), Seibu noted that the “asset lightening” will help to accelerate its post-pandemic growth strategy through “management reforms to build a stronger financial and business structure in response to possible recurring risks”.

The GIC deal comes one month after Seibu offloaded its subsidiary Seibu Construction, which builds detached houses, condominiums and resorts, to Japanese engineering firm Mirait Holdings for 38 billion yen.

Through the sale to GIC, which is expected to be finalised in May when a contract is signed before the official transfer of assets in September, Seibu stands to reap a profit of 80 billion yen, after deducting incurred costs.

The deal involves the sale of 31 properties out of Seibu’s overall portfolio of 76 facilities, with GIC taking ownership of 15 hotels, 10 golf courses and six ski resorts.

They include the flagship luxury five-star Prince Park Tower Tokyo next to the landmark Tokyo Tower, as well as the Naeba Ski Resort, popular among youth both in winter for its powder snow and in summer for the Fuji Rock Festival, which usually features more than 200 Japanese and international musicians and ranks as Japan’s largest outdoor music event.

Seibu will continue to operate the facilities that are sold to GIC.

The Japanese company is holding on to properties such as the flagship Shinagawa Prince Hotel as well as its hotel in popular day trip destination Karuizawa and its adjacent golf courses.

The Prince Hotel is one of Japan’s legacy brands, having begun when Seibu founder Yasujiro Tsutsumi bought land from impoverished imperial and noble families after World War II.

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