TOKYO, July 26 (Reuters) - The private equity arm of J.P. Morgan Chase & Co Inc said on Friday it had reached agreement to buy a Japanese auto parts subsidiary of Nissan Motor Co Ltd for around 10 billion yen ($86 million).
Nissan, Japan's third-largest carmaker, said separately it would sell its 51 percent stake in unlisted auto parts maker Rhythm Corp as part of its new three-year business plan aimed at cutting debt to zero.
J.P. Morgan Partners (JPMP), the private equity arm of New York-based J.P. Morgan Chase, said that funds managed by J.P. Morgan Asia Equity Advisors would acquire Nissan's stake.
JPMP will also acquire the 49 percent stake in Rhythm held by another Nissan components supplier, Unisia Jecs Corp .
The deal will mark JPMP's first management buy-out and second investment in Japan, which it said was aimed at making Rhythm a stronger global player.
"JPMP...views Japan as a promising growth market for management buyouts...(and) is targeting sectors, for example auto components, electronics and machine tools, where Japan is competitive globally," the firm said in a statement.
Nissan said it would continue to buy parts from Rhythm after the transaction is completed on August 9.
Rhythm, which specialises in steering and suspension parts, had sales of 22.6 billion yen in the year ended in March, and around 1,000 employees.
The announcement came after the close of trading on Friday. Shares in Nissan ended down 5.41 percent at 770 yen, while Unisia Jecs fell 3.57 percent to 135 yen.
The key Nikkei average was down 3.41 percent. ($1=116.60 yen)