Advantage closes fifth Japan fund at $535m

AVCJ understands that the vehicle was slightly oversubscribed. A first close came in December 2015 and the fund made its debut investment at the same time, buying funeral services company Epoch Japan. It has completed five acquisitions to date, accounting for about 35% of the total corpus.

LPs in the fund are predominantly existing Advantage backers, with about 65-70% being Japanese financial institutions and the remainder represented by international investors including fund-of-funds, pensions, insurance companies and family offices.

“LPs want to get developed Asia exposure because they like the risk-weighted return profile they see here,” said Richard Folsom (pictured), co-founder of Advantage. “They also recognize the increase in activity in this small to mid-market space where they and ourselves have seen the most consistent deal opportunity set as well as the best returns. There’s been an explicit interest from LPs to target this buyout space.”

It is the fourth final close by a Japanese mid-market private equity firm in the space of a month. Earlier this week, J-Star closed its third domestic buyout fund at the hard cap of JPY32.5 billion, beating an initial target of JPY30 billion. Meanwhile, Tokio Marine Capital raised JPY51.7 billion for its fifth fund and Integral Group closed its third vehicle at JPY73 billion.

For Advantage, the raise follows a JPY215 billion close in 2007 for its fourth fund, which recorded a significant loss on Tokyo Star Bank during the global financial crisis. The firm launched a bridge fund in 2013, which closed later that year at JPY20 billion.

Advantage is also currently raising an Asia ex-Japan fund, which launched in mid-2015 and is targeting a corpus of $400 million. The fund, which will be the GP’s first non-Japan vehicle, reached a first close last year with commitments from Mitsui & Co and Japan Bank for International Cooperation, the latter of which confirmed it would contribute up to $50 million.

About 50% of Fund V will be deployed in consumer-related industries, with 20% targeting industrials, and the remainder in a range of sectors including business services. Equity checks will be $10-100 million per deal. In addition to Epoch, recent investments from the vehicle include outdoor sports equipment retailer Ishii Sports.

The close coincides with the exit of a 34% stake in Japanese real estate business Katitas, which Advantage acquired in March 2012. Details of the transaction were not disclosed, but according to a statement, the company is now the largest second-hand renovated housing business in Japan with annual sales totaling JPY60 billion.

Recent exit activity by the firm also includes an agreement to sell its controlling stake in GTA TeleGuam – the principal telecommunications provider on the US island of Guam – to US family office Huntsman Family Investments. The deal size has not been disclosed, but a previous attempt to exit the company to Telekom Indonesia had reportedly valued it at about $300 million.

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• Topics
• North Asia
• Consumer
• Industrials
• Fundraising
• Buyout
• Japan
• Advantage Partners