WM Partners in debut secondary deal

 The secondaries story in Japan has typically been dominated by pan-regionals scouring the portfolios of mid-market players for scale-up opportunities or specialists reaching out to lower mid-market GPs that want to jettison legacy portfolios. WMP, however, focuses elsewhere - it seeks to bridge the gap between early stage VC and growth capital.

The appropriately named Project Bridge - WMP's debut deal - is a taste of the kind of bespoke solutions the GP is offering.

A $3 million bulk secondary transaction, Project Bridge comprises of two LP interests - one managed by an early stage investor, the other by mid-cap private equity firm - and two portfolio investments acquired from an unnamed VC firm looking for liquidity. The two portfolio investments include a stake in an undisclosed e-commerce firm and a 12% interest in Japanese B2B marketing platform Shanon, which has also received follow-on investment from WMP via a convertible bond issues as part of the package.

"It is hard for Japanese GPs and promoters to find good investors to provide these kinds of package transactions," Matsumoto tells AVCJ. "While we do not expect these kinds of deals to happen all the time, we are able to provide these kinds of tailor-made solutions."

Set up in 2000, Shanon runs an online software-as-a-service (SaaS) platform that focuses on event management and allows users to automate marketing processes via email, social media and websites. The business claims to serve 600 clients, with sales growing at a compound annual rate of 40% over the past five years. WMP hopes to support the firm's continued expansion as it plans to go public later this year.

Matsumoto notes that while there are a number of early-stage investors and mid-market buyout firms in Japan, there is a dearth of growth-stage investors in between, creating a strong pipeline for deals like Project Bridge. He adds that many early-stage investors provide opportunities for traditional secondary deals as they look to exit their fund commitments.

"We often have discussions with GPs who - at a later stage in the fund's life - have developed a different strategy," he said. "We help these GPs unlock these issues by providing solutions and offering both our experience and investment."
The Project Bridge investment was made via JSPF No.3 which was launched last year following the spin-out. Matsumoto, a former CEO of JAIC, ran the group's secondaries business for more than a decade.

The fund reached a first close of JPY5.25 billion ($50.1 million) in January and is targeting a final close of JPY10 billion. LPs include several institutional and strategic investors, such as the government-backed Organization for Small & Medium Enterprises and Regional Innovation, Japan (SMRJ), which put in JPY2 billion.

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• Topics
• North Asia
• Early-stage
• Secondaries
• Japan
• Secondaries
• Venture
• Growth capital
• WM Partners