Longreach closes latest buyout fund at $650m
The Longreach Group has reached a final close of $650 million on its third North Asia-focused mid-market buyout fund.
The fund, Longreach Capital Partners 3 (LCP 3), will primarily target control buyout investments in Japan’s industrial and technology, business services, and consumer sectors, with opportunities in Greater China also considered. Corporate carve-outs are expected to feature strongly in LCP 3, and Longreach will also seek companies with strong growth prospects in Asian markets.
In a statement, Longreach said capital commitments came from a diverse group of global investors, with high re-up rates from LPs in previous funds. Participants include corporate and government pension funds, sovereign wealth funds, financial institutions, and fund of funds, originating in Japan and the rest of Asia, the United States, Canada, and Europe.
The vehicle launched in 2016 and achieved a $200 million first close the following year. Investments from the fund include the carve-out of Fujitsu Component, a unit of electronics manufacturer Fujitsu, and the acquisition of coffee shop chain Kohikan Corporation from food services conglomerate UCC Holdings.
Longreach closed its previous fund, LCP 2, at $400 million in 2012, following a fundraising process that lasted more than two years and saw the firm scale back its initial target of $750 million. The firm attributed the fundraising difficulties in large part to investor wariness following the global financial crisis, as well as macroeconomic challenges in Japan.
Longreach has offices in Hong Kong and Tokyo, with about $2.1 billion in committed and deployed capital across its three funds, including co-investments from LPs. It pursues deals in the $50 million to $250 million range, targeting companies where its network and execution capabilities in Japan can offer differentiated value.
Carve-out deals from large Japanese corporates have played a large role in the firm’s deals, and deal flow in this area is expected to remain strong as companies pursue reorganization and restructuring decisions in order to remain globally competitive.
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