Advent to close Tokyo office, 'winds up' $725m fund

The global mid-market firm has said a dedicated Japan office and fund aren't viable given insufficient deal volume, and will instead focus on opportunities in China and other emerging Asian countries.

Boston-headquartered private equity firm Advent International will close its Tokyo office at the end of March.

“We’ve had long and detailed discussions with our investors about our strategy for Asia and have come to the conclusion that there isn’t a sufficient volume of opportunities that meet our investment criteria to sustain an office in Japan and a dedicated Japan fund,” an Advent spokesman said.

The firm has “wound up” its ¥60 billion (€521.2 million; $725.3 million) Japan Private Equity Fund, which closed in September 2008 and has not done any deals. A spokesman was unable to comment as to whether the uncalled commitments would be returned to limited partners, or if the firm instead intended to ask investors to use the capital for a different strategy. The spokesman declined to comment on whether management fees might be reimbursed.

“Our focus has shifted to a broader strategy for Asia which will enable us to explore the many opportunities in China and other emerging Asian countries,” stated the spokesman. No plans for the opening of a new Asian office were disclosed.

The news comes just three months after the retirement of Hiroshi Matsumoto, who formerly headed the firm’s Japan office and was replaced by Yoji Anzai in December last year.

It is unclear whether the six remaning investment professionals in Tokyo would continue to work for Advent. The firm is currently in “internal discussions” with the staff, the spokesman said, declining to comment further.

There isn’t a sufficient volume of opportunities … to sustain an office in Japan and a dedicated Japan fund.

Advent opened the Tokyo office in 2001, initially to build a profile with Japanese institutional investors. The mid-market focused firm has yet to transact in the country, although according to a spokesman in December last year, the firm was in the midst of accessing several potential deals.

Advent currently has one other Asian office in Mumbai, which it opened in July 2009. The firm's India team lost an operating partner when P Jayendra Nayak left in March last year. Currently, there are five investment professionals in the Mumbai office headed by Georg Stratenwerth. Thus far, Advent has completed one transaction in India, investing an undisclosed amount in Chennai-headquartered Computer Age Management Services. The deal was made in October 2007.

Advent currently invests out of three funds – the $10.4 billion GPE VI, focused on Western Europe and North America, the $1.6 billion ACEE IV focused on Central and Eastern Europe and the $1.65 billion LAPEF V which focuses on Latin America.