Yamaguchi bank launches $30.7m SME restoration fund

The fund's backers include the Yamaguchi Bank, Credit Guarantee Corporation of Yamaguchi, Hagi-Yamaguchi Shinkin Bank, Higashi Yamaguchi Shinkin Bank, Nishi- Chugoku Shinkin Bank, Kita Kyushu Bank and the Organization for Small and Medium Enterprises and Regional Innovation Japan (SMRJ) - a government agency operating under the Ministry of Economy, Trade and Industry.

Acording to a release, the fund will focus on investing in SMEs in the Yamaguchi region in western Japan and will have a lifespan of eight years with the option of extending.

It is the latest of a series of regional funds set up throughout the country with the view to supporting small businesses. Earlier this month, the JPY3.3 billion Kyushu BOLERO was set up by Dogan Advisors with a similar remit in the Kyushu region. This fund was also backed by SMRJ, which made the lion share of contributions with a consortium of regional and local banks making up the balance.

One of the contributing factors, which has led many regional banks to team up with investment banks and turnaround GPs to form locally-focused revitalization funds, has arguably been the expiration of the Japan's Debt Moratorium Law earlier this year. The removal of the legislation, which obliged financial institutions to allow SMEs to defer on debt repayment, has sparked an increase in distress opportunities.

SMEs make up 70% of bank borrowings in Japan compared to just 30% in the US.

According to Japan's Tokyo Shoko Research Institute, by the first quarter of 2012 over 3.2 million SMEs, with debts totaling JPY88 trillion, had made applications to Japan's 404 financial institutions to renegotiate the terms of their loans. More than nine out of 10 applications were granted.

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• Topics
• North Asia
• Credit/Special Situations
• Fundraising
• SME
• Japan
• Distress
• Fundraising