New Frontier Japan targets $94m for second fund

A first close of JPY7-8 billion has been penciled in for next month, Koichi Sakurada, a partner and chairman at NFJI, told Mergermarket, AVCJ's sister publication. The firm raised JPY6.27 billion for its debut fund in 2016 and has deployed nearly all the capital across six investments.

"The focus of the new fund remains the same as the first fund – succession issues. The COVID-19 outbreak hit small businesses and economic uncertainties have largely impacted them, not only aging founders but younger generations in their 40s and 50s too. Some of these owners are now seeking early retirement and the investment opportunities are plentiful," Sakurada said.

In addition to pursuing traditional succession opportunities, NFJI will support companies that are facing economic stress because of the pandemic. This includes serving as a rehabilitation sponsor for businesses that are fundamentally strong but face near-term headwinds as well as distress situations that involve negotiating legal liquidation and alternative dispute resolution processes.

Prior to founding NFJII in 2015, Sakurada was a senior managing director at the government-affiliated fund Enterprise Turnaround Initiative Corporation of Japan (ETIC), now known as the Regional Economy Vitalization Corporation of Japan (REVIC). Several other team members, including Daisuke Yoshida, the firm's president and a partner, have turnaround experience from REVIC.

While NFJI has a generalist mandate, it is interested in areas such as food distribution, consumer packaging, beauty and personal care-related services, IT and industrial equipment and components, and electronic parts. There is a preference for companies that can grow through bolt-on acquisitions.

Targets will have EBITDA of JPY100-500 million and there is scope for co-investment with the private equity arms of regional banks, Sakurada added.

NFJI secured a first exit from its debut fund earlier this month with the sale of Tokyo-based beauty salon operator Headlight to AZ-Star – a PE firm backed by Aozora Bank and Tokyo Star Bank – and Jafco. It still owns restaurant-related businesses Complete Circle and Comer, lubricating oil producer Sakura Seiyusho, electronic components manufacturer Flat Electronics, and ground survey specialist Kinjo Jyuki.

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• Topics
• North Asia
• Fundraising
• Buyout
• Japan
• New Frontier Japan Investment (NFJI)