Japan’s D Capital hits third close on debut fund
D Capital, a recently established Japanese middle-market private equity firm, has achieved a third close of JPY 27bn (USD 186.4m) on its debut fund. The target is JPY 30bn.
D Capital was spun out from Unison Capital in March last year and formally launched its fund last October. It has positioned itself as Japan’s first private equity firm headed by both investment professionals and operationally active digital transformation specialists.
Most of the capital to date has been raised domestically, although the latest close was led by regional financial institutions and corporations, according to a statement. As of the JPY 20bn second close last April, LPs included Development Bank of Japan, Sumitomo Mitsui Banking Corp, Shinsei Bank, Aozora Bank, and SMRJ, a government investor for the small business sector.
Japan’s middle market is an attractive market for regional and global LPs, but to date, this demand has resulted in larger fund sizes for existing GPs in the country rather than an expansion of the local GP universe. D Capital could represent some reversal of this trend in light of LP wariness about oversized funds.
According to AVCJ Research, the annual average amount raised by buyout funds in the country increased 66% when comparing 2018-2021 with the prior four-year period. Meanwhile, the number of funds has remained relatively constant at about 10 per year.
D Capital’s focus on digital operations support is its key ploy in competing against the more established brands, especially as large-cap players such as The Carlyle Group increasingly encroach on the lower end of the market.
The founders include Koichi Kibata. Prior to joining Unison, Kibata trained as a physician and launched a health-tech start-up, and also served as an executive at Japan Data Science Consortium (JDSC). JDSC is an LP in D Capital’s fund.
Cheque sizes will be in the JPY 3bn range, while targets - in areas like healthcare, consumer, and manufacturing - will have enterprise valuations around USD 100m. Investments to date include multimodal transport provider FC Standard Logistics and furniture retailer Francfranc.
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