Fund focus: Advantage set for Asia ex-Japan push

Japanese GP Advantage Partners drafted in two domestic powerhouses – trading companies Mitsui & Co. and Marubeni Corporation – as partners for its debut Asia fund. It sent a message to other investors: corporate Japan believed in the venture and was willing to provide strategic support.

In addition to making LP commitments, Mitsui and Marubeni seconded people to the Advantage team, enabling the fund to tap into the two companies’ networks when sourcing deals, carrying out due diligence, and implementing value creation strategies. But the relationship works both ways.

“Their people are being trained and they will eventually go back and perform different roles in their respective companies,” says Emmett Thomas, head of Asia for Advantage. “They will also learn more about investing in Asia, specifically buyouts. While Mitsui and Marubeni are both active principal investors, it tends to be venture and growth capital.”

The final close of the Asia fund at $380 million after about two years on the road coincides with the latest surge in Japanese outbound investment. Advantage helps portfolio companies in its Japan funds enter new markets, and the Asia vehicle is expected to work with other domestic corporates on similar initiatives. “Discussions are happening at a deal-by-deal level,” says Thomas. “It’s another part of the Japan angle that is going to increase.”

The GP started investing outside of Japan through its fourth domestic fund, completing four deals – GTA TeleGuam and China-based Qin Jia Yuan Media Services, Qingdao Hisense Broadband Multimedia, and ESG. All four have now been exited. Part of the operational thesis with ESG was bringing in a Japanese strategic player as a co-investor to provide training and introduce new systems and processes.

Advantage also leveraged its local networks to bring in Japanese customers for ESG and Qin Jia Yuan. Meanwhile, Qingdao Hisense, which manufactures telecom equipment parts, received assistance in sourcing technology from Japan. 

The new fund will make investments of $20-70 million and only target companies where there is a valid Japan angle. This means most deals will not be a good fit, but for investments that do meet Advantage’s criteria, the firm expects to have a unique edge on rival bidders in what are typically limited auctions.

Four investments have already been agreed, two in China, one in Taiwan, and one in Malaysia. Part of the strategy with one of the China deals, a Beijing-based operator of Korean restaurants called Zheng Yi Wei, was to take the founder to Japan and show him what Advantage has done in the restaurant space there.

“We explained what we had done to help build up these companies, such as systematizing business processes and bringing people in to do restaurant design, and he said, ‘That’s what I want too,’” Thomas adds. “It’s an example of how our capabilities in Japan can translate to China.”   

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• Topics
• North Asia
• Buyout
• Fundraising
• Japan
• Asia
• Advantage Partners