CITIC Capital seeks $250m for third Japan fund

The Hong Kong-headquartered firm, which is looking to raise ¥7bn more than its previous Japan-focused fund, is eyeing investments in Japanese consumer and services companies that are planning to expand in China.

CITIC Capital Partners, the private equity arm of CITIC Capital Holdings Limited, is looking to raise ¥25 billion ($250 million; €220 million) for its third Japan-focused fund.

CITIC Capital Japan Partners III, which was launched in the fourth quarter of 2015 and has a hard-cap of ¥30 billion, will make investments in Japanese consumer, healthcare, and industrials companies seeking to expand in China.

The fund is understood to be on track for a final closing by the end of the year.

CITIC Capital declined to comment on the fundraising.

Hironobu Nakano, CITIC Capital’s senior managing director and head of Japan, told Private Equity International in an email response that the firm has secured capital from most of its existing limited partners and expects new commitments to come in at final closing.

Investors in CITIC Capital’s funds include the Canada Pension Plan Investment Board, Sumitomo Mitsui Trust Bank, and Temasek Holdings, according to PEI data.

According to Nakano, the fund will focus on deals in the consumer and services sectors to capture the growing consumption demands of China’s rising middle class. Three investments have already been made from the fund – women’s clothing retailer Mark Styler, footwear company Akakura, and an undisclosed healthcare company.

Nakano added that the firm’s earlier Japan focused funds are “performing very well”. Japan Growth Partners, its 2005-vintage vehicle that raised ¥20 billion, has realised three investments and returned more than 2.5 times invested capital. Meanwhile, 2010-vintage CITIC Capital Japan Partners II, which raised ¥18.2 billion, against a ¥30 billion target, has returned more than 3 times invested capital, according to Nakano.

The firm’s investments include food and beverage manufacturer Pokka Corporation, polymer parts manufacturer Polymatech, and car audio systems parts producer Shinwa International.

In May this year, CITIC Capital sold its 67.1 percent stake in packaging firm Tri-Wall to Osaka-based packaging manufacturer Rengo Company for an undisclosed sum.

In March, the firm launched CITIC Capital China Partners III, a China-focused fund which aims to raise $1.5 billion, of which $1.2 billion will be raised in US dollars and $300 million in renminbi, according to PEI data.

CITIC Capital manages over $5.8 billion across private equity, real estate and venture capital funds.