CITIC closes second Japan fund on $217m

CITIC Capital Japan Partners II, which closed on ¥18bn, short of its ¥30bn target, has made two investments to date.

CITIC Capital has closed its second Japan buyout fund at over ¥18 billion ($217 million; €157 million), the firm said in a statement.

CITIC Capital Japan Partners II will adopt a similar strategy to that of its predecessor fund in targeting buyouts of mid-market Japanese companies, “particularly those with substantial operations or growth potential in China”, the statement noted.

Zhang Yichen, chief executive officer of CITIC Capital said the fund would target Japanese firms seeking to expand onto the Chinese mainland- a sentiment which was echoed by his colleague Hironobu Nakano, head of CITIC Capital Partners’ Japan operations.

“Our team, based primarily in Tokyo and Shanghai, looks forward to finding a new set of opportunities to help Japanese companies maximise their potential through international expansion,” Nakano said.

The close falls short of the original target of the ¥30 billion figure given to PE Asia by a CITIC spokesperson last year. It is unclear what the reasons were for the shortfall as the firm declined to comment beyond the release.

The fund has thus far made two investments, into JASDAQ-listed Higashiyama Film and Tri-Wall K.K.

CITIC backed Higashiyama, a designer and producer of coated films for use in applications such as touch panel, mobile phones, and home appliances, with a ¥1.3 billion investment in return for a 63.12 percent stake in May last year. The firm made the investment via HF Holdings, an investment vehicle formed with co-investors Castle Rock Holdings and Wealth Rock Holdings, according to a previous statement released by Higashiyama on the Osaka Securities Exchange. The tender offer price of ¥650 per Higashiyama share had marked a 12 percent premium over the company’s trading price over the first half of 2010.

Tokyo-based Tri-Wall provides heavy-duty packaging materials, designs, and services for export and factory-to-factory transportation. CITIC’s investment size in the company was undisclosed. However, Tri-Wall has market capitalisation of about ¥3.1 billion, according to the company’s website.

The Nikkei Business Daily last year attributed the Japanese company's interest in CITIC Capital's investment to its desire to list in Hong Kong.

Part of the CITIC Group, one of China’s largest financial conglomerates, CITIC Capital is partially owned by the China Investment Corporation, China's sovereign wealth fund, which invested an undisclosed sum for a 40 percent stake in the company in 2009. 

A Reuters report then had suggested the stake would cost $258 million and that CITIC Capital would issue new shares to Beijing-headquartered CIC in a deal aimed at boosting its capital base to HK$5 billion ($645 million) from HK$3 billion.

The firm’s previous investments out of its first Japan-focused fund, CITIC Japan Partners, include China tableware maker Narumi China and beverage company Pokka.