Advantage Partners closes fifth Japan fund on hard-cap

The Tokyo-based firm secured majority of the commitments from Japanese banks and financial institutions.

Japanese mid-market private equity firm Advantage Partners has held a final close on its fifth Japan buyout fund on its ¥60 billion ($540 million; €493 million) hard-cap, Private Equity International has learned.

The firm began raising capital for Advantage Partners V in early 2015 and held a first close in December that year on about 50 percent of the fund.

According to Advantage Partners founder Richard Folsom, the firm was not gearing up to have a first close so soon but its interim fund, 2013-vintage, ¥20 billion Fund IV-S had deployed all of its capital and needed to accommodate some imminent deals in the pipeline.

The firm made its first investment in funeral services provider, Epoch Japan, in the same month that it held a first close on Fund V.

To date, the firm has sealed five investments with a sixth deal signed at the time of Fund V's final close on 30 April.

Sixty five percent of Fund V commitments came from Japanese LPs such as banks and financial institutions, while the remaining 35 percent came from international LPs including European insurers and Asia-based funds of funds whose capital is drawn from US-based pension funds and family offices.

“We've seen that with the recent fundraising activity in Japan, some of the regional banks are getting into private equity investing for the first time. Similarly, some of the insurers that had been active several years ago and had taken some timeout in the market are now back and making new allocations,” Folsom said.

Advantage made a 3 percent GP commitment to the fund.

Advantage will invest in around 16 deals for Fund V, exclusively in the small- to mid-cap segment in Japan. Folsom said the firm sees this as the most active and attractive segment in the market in terms of deal volume. He added: “We continue to see founder-owner succession deals that draw on that population of companies; spinoffs of large corporations are also a growing segment of the market.”

Folsom added the firm is expecting 2017 to be a record year of exits for the firm for its prior funds: the 2007-vintage ¥216 billion Fund IV and ¥20 billion Fund IV-S.