Fund focus: Globis gets traction with pension LPs

Domestic pension funds were the surprise participant in Tokyo-based VC firm Globis Capital Partners' latest fundraise. The GP has reached a final close of JPY16 billion ($150 million) on its fifth vehicle, which launched last September, with more than JPY23 billion in prospective commitments. A handful of corporate pension funds number among the LPs.

"It is rare for Japanese pension funds to invest in Japanese private equity, including venture capital. That's really something new," says Shinichi Takamiya, a partner at Globis. "Our previous fund had one pension fund LP, and got to know that institution during Fund II but it didn't invest until Fund IV. It was like building the relationship for 15 years before they invested; and it was also their first investment in a domestic VC fund."

Alongside the pension funds, various institutional investors participated in Fund V, including Sumitomo Mitsui Trust Bank, Development Bank of Japan, and life insurers Daido Life and MassMutual. The domestic share is about 30%, with the rest from international investors. The strong foreign interest contrasts with Fund IV - which closed below target at JPY11.5 billion in 2013 - when commitments from offshore LPs declined from the third fund.

Takamiya credits reforms put in place by Japanese Prime Minister Shinzo Abe that he claims have contributed to an improved macroeconomic environment and a stronger VC ecosystem. Three years ago, if a start-up raised $3 million, it was considered a big round; today $10 million rounds happen with increasing regularity and the recent $74 million raised by e-commerce app Mercari represents a huge leap forward.

Globis, an early investor in Mercari, brought in several LPs as co-investors. Co-investment is likely to feature in the new fund as Japanese start-ups address global markets and raise larger rounds.

"We focus on companies with a Japanese angle, because our LPs are diversifying their geographic exposure and we are part of the Japanese allocation. But of course we will pursue the upside of Japanese companies going global. We already have some portfolio companies with offices in the US, Singapore and Hong Kong," says Takamiya.

Deals in the new fund will range from early stage to late stage and take in a wider range of industries, reflecting the fact that internet technology has penetrated traditional offline businesses. Financial technology, healthcare, education, the internet-of-things (IoT), artificial intelligence and robotics are all expected to feature prominently as Globis looks to leverage its domain expertise and get early exposure to emerging trends.

"We are expecting to see big global start-ups coming out from Japan," adds Emre Yuasa, senior associate at Globis. "As such, we have partnered with a large pharmaceutical company, Merck & Co, to provide an accelerator program for start-ups. We will contribute start-up management skills and Merck will provide sector expertise."

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• Topics
• North Asia
• Fundraising
• Venture
• GPs
• LPs
• Japan
• Globis Capital Partners
• Sumitomo Mitsui
• The Development Bank of Japan (DBJ)