Ant Capital sees 60% IRR on VarioSecure exit

In 2009, Ant Capital's team, led by Nick Kondo, who later became the Chairman & CEO of VarioSecure, took 100% of the company's shares via a management buy-in funded by the firm's Ant Catalyzer No.3 vehicle, a yen-denominated fund launched in 2006. The total cost was JPY3.3 billion ($39.2 million). After Ant's acquisition, VarioSecure's President & CEO, Chihiro Sakamaki, and the company's full management team relinquished their positions as part of the buy-in.

Fast forwarding a year and a half, this exit translates to 2.03x return on Ant's original investment, with further IRR of 60% per annum. The buyer, listed software provider 1st Holdings, has been approximately 50% backed by Tokyo-based Advantage Partners since March 2004, when 1st Holding's parent firm spun the unit out as part of its restructuring process.

Profitable exits in Japan have been a rarity recently. In fact, seeing assets sold at a large discount to their acquisition prices, especially during an economic downturn, is far more common, but VarioSecure bucked this trend because of its high growth potential in the global market, said Kondo.

"In Japan, it is still not quite accepted by entrepreneurs to give up the companies they founded, but we spent time to build trust with the management through various discussions explaining what we could do to further develop VarioSecure," Kondo (pictured) told AVCJ.

"I think it is essential to move quickly when making decisions regarding changes and new business strategies to re-activate the company," he added of the firm's strategy.

Since the acquisition, the company has grown by introducing a new hardware lineup, and by adding new services. The company also developed an English version of its service, elevating its position from a domestic firm to a true global company. VarioSecure now offers 19 different network security services to over 3,100 business operation stations.

Kondo further attests to VarioSecure's robust potential, given its performance during a time of distress. "Our exit announcement was made just one day before the earthquake in Japan, and I thought that deal was over because of the extensive damage Japan suffered," Kondo said. "But, even the services that we provided to Tohoku area, where had been most severely damaged by the earthquake, was only very minimally impacted. We felt even stronger about our service. After the earthquake, more customers are considering contracting with network security service providers like Vario."

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• Topics
• North Asia
• Exits
• Technology
• Ant Capital Partners