Mizuho spinout targets $263m for Japan buyout fund

The GP is already in talks with prospective investors, CEO Masahide Sato told Mergermarket, AVCJ’s sister title. A first close has been penciled in for the first quarter of 2022. Fund V closed in 2019, also with JPY30 billion in commitments.

MCPC was previously part of Mizuho Capital Partners, a private equity firm jointly owned by Mizuho Bank and one of its subsidiaries, Mizuho Capital. Mizuho Capital Partners rebranded as MCP Partners in February, a move that coincided with the owners selling down their stakes.

Mizuho Bank now holds 14.9% of MCP Partners. The remainder is held by OKB Capital, Kiraboshi Bank, Sompo Japan Insurance, Dai-ichi Life Insurance, Nippon Life Insurance, Fukoku Mutual Insurance, and Higin Capital, among others. The management of MCP Partners also has a stake.

MCP Partners has continued the structural reforms, separating its main strategies into individual legal entities – MCPC, which focuses on buyouts, and MCP Mezzanine, a structured credit specialist. Both are still wholly-owned subsidiaries of MCP Partners. The changes are intended to ensure operational independence and strengthen firewalls, according to a statement.

In addition to Sato, who joined Mizuho Capital Partners in 2005, the leadership team includes two managing directors, Wataru Kojima and Hiroaki Nakai. Both are relatively recent recruits, with Kojima arriving from New Horizon Capital in 2019 and Nakai joining from The Longreach Group.

Fund V is more than 70% deployed and has five current investments: meat retailer New-Quick, machinery manufacturer Nissei, rental housing provider Takasakijimuki, ground survey specialist Japan Home Shield, and motorcycle component supplier Komine.

The new vehicle will follow a similar remit, targeting businesses with EBITDA of JPY500 million to JPY2 billion. There is a preference for companies that generate stable cash flow and have strong fundamentals. Roll-ups are a key strategic element. More than 30 have been completed since Mizuho Capital Partners was established in 2000.

Sato noted that MCPC’s holding periods tend to be longer than most other private equity firms, with an average tenure of 5-6 years. More than half have been exited by IPO.

“Once companies become larger, we help them to optimize their management organizations and provide them with skilled personnel. We have to make sure that our portfolio companies will continue to grow sustainably even after we exit. We need five to six years for this purpose, three years is not enough,” Sato said.

Other recent spinouts in Japan include T Capital Partners, which separated from Tokio Marine ahead of launching its sixth fund last year. A final close of JPY81 billion came within six months, with overseas LPs accounting for 40% of the corpus. The private equity firm’s captive status was previously a deal-breaker for many international investors considering commitments.

Unlike MCPC, T Capital secured a clean separation from its parent, with management taking full ownership of the GP.

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• Topics
• North Asia
• Fundraising
• GPs
• Buyout
• Japan
• Mizuho Capital Partners
• MCP Capital