Japan Industrial Partners set for $1.4b fundraise

The offshore portion of the main fund is JPY76.3 billion, with a further JPY26 billion to be raised from onshore investors. That tranche is scheduled to close in June, according to sources familiar with the situation. The co-investment vehicle is almost entirely offshore money.

It amounts to a sizeable step up from the previous fund – Japan Industrial No.4 Investment Enterprise – which closed at JPY67.4 billion in 2013. This is said to reflect expectations of increased large-cap deal flow as a combination of governance reforms and an emphasis on return on equity and maintaining competitiveness prompts Japanese conglomerates to divest non-core assets.

There have already been several sizeable carve-outs and JIP participated in one: it partnered KKR on a tender offer worth JPY322 billion for Hitachi Kokusai Electric, taking a minority stake in one division following a restructuring of the business. With $1.4 billion across a larger main fund and a co-investment vehicle, JIP could participate more significantly in big deals and reach deeper into the middle-market segment on its own.

JIP was established in 2002 with a mandate to support the revitalization of Japanese companies, primarily by carving out and restructuring assets from large players and straight restructurings of mid-size businesses. It typically works with management teams to drive growth. AVCJ Research has records of more than 20 deals across a range of sectors, although manufacturing is a strong theme. Prior to the most recent raise, total funds under management stood at nearly JPY170 billion.

The PE firm’s most recent agreed investment was the acquisition of Alaxala, a joint venture between Hitachi and NEC that produces routers and switches. This is not the first time JIP has carved out a business from NEC. It bought internet service provider Biglobe in 2014 and then electronics components player NEC Tokin last August. Biglobe was sold to KDDI Group in 2016 for JPY80 billion.

Other notable acquisitions include Sony’s Vaio PC division and restaurant operator Skylark. While the former was a carve-out, the latter was a secondary buyout, with JIP and Bain Capital purchasing the business from Nomura Holdings. Skylark has now been fully exited.

Private equity investment in Japan reached a record $25.8 billion in 2017, more than the previous three years combined. Buyouts accounted for the vast majority of dollars committed, led by the JPY2 trillion acquisition of Toshiba Memory Corporation by a Bain Capital-led consortium.

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• Topics
• North Asia
• Buyout
• Fundraising
• Japan
• Japan Industrial Partners
• GPs