Ant Capital seeks $461m for sixth Japan fund

The formal fundraising process began in January, Ryosuke Iinuma, the firm’s representative director and a managing partner, told Mergermarket, AVCJ’s sister title. He added that Ant has ambitions to raise capital from Asia-based sovereign wealth funds and family offices, as well as the domestic institutional investors and banks that have historically contributed the bulk of its money.

The strategy for Ant Catalyzer No.6 will be the same as that of its predecessor, which closed at JPY31 billion in late 2017. Ant specializes in small to mid-cap buyout and Iinuma expects the new vehicle to make 10 investments with an average equity check size of JPY4 billion.

Larger deals with be targeted on a case-by-case basis, as evidenced by the firm’s pursuit of Softbrain, a sales and marketing software developer that was acquired via a tender offer at a valuation of JPY26.9 billion. Ant contributed JPY10 billion in equity, with co-investors putting in the rest.

Historically, the firm has focused on consumer, retail and business services, but the first two are likely to be less prominent in the new fund, partly because COVID-19 has left many companies with uncertain prospects. Rather, Ant will turn its attention to healthcare and IT, as well as business services.

Iinuma noted the pandemic has left many founders weary, and therefore potentially more open to selling their businesses. He also expects more activity on the corporate carve-out side, adding that rising competition for deals in this space will be counterbalanced by increased supply.

Moreover, Ant sees its in-house operational expertise as a differentiator. This includes a dedicated artificial intelligence and digital transformation team that helps portfolio companies address tech disruption.

“Buyouts have entered a new stage and we need to take portfolio companies to the next level,” Iinuma said. “Historically, GPs would have received 2-3x return on investment, but in the next three to five years, using technology, we can potentially see more than 5x return if we bring in disruption.”

Ant’s management team currently owns 50.1% of the GP, with Norinchukin Bank and Mitsui & Co each holding 24.95%. Management would consider increasing its position, fitting in with a general trend in Japan for private equity firms to seek greater independence from their corporate parents.

For example, Tokio Marine Capital separated from Tokio Marine in 2019 and was subsequently renamed T Capital Partners. Earlier this year, the firm raised JPY81 billion for its sixth fund, having successfully tapped overseas investors for the first time.

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• Topics
• North Asia
• Buyout
• Fundraising
• GPs
• Japan
• Ant Capital Partners