CLSA hits $400m hard-cap for Japan fund

The mid-market-focused firm held a single close on its third Japan buyout fund, Sunrise Capital III, after less than seven months of fundraising.

CLSA Capital Partners has held a final close on its third Japan-focused fund, hitting its hard-cap of $400 million.

The firm launched Sunrise Capital III in October 2016 with a $350 million target and received strong support from existing investors in addition to commitments from a diverse group of new investors from across the globe that include endowments, foundations, pension funds, financial institutions, funds of funds and family offices.

New investors from North America, Japan, Europe, the Middle East and Asia (ex-Japan) made up 75 percent of the capital raised, the firm said in a statement. Among its LPs are Verizon Pension Fund, fund of funds manager AlpInvest Partners, as well as Asian and global funds of funds, according to market sources. CLSA declined to comment.

All but one of the investors in Sunrise II re-upped, a source with knowledge of the matter told PEI, but because of strong interest from investors, several of the LPs had to cut back their allocations for Sunrise III.

The source added that because of investor demand, the firm didn’t offer discounts or incentives to LPs and raised the fund in the standard 2 and 20 fee model.

The firm made an almost 5 percent GP commitment to Sunrise III.

The fund’s predecessor, Sunrise Capital II, reached a final close on $210 million in late 2014 and had made investments in companies such as education company KK BC Holdings, food and beverage manufacturer Asamiya and auto maintenance tool retailer WorldTool. Meanwhile, 2006-vintage CLSA Sunrise Capital Partners, which closed on $350 million is now fully liquidated, according to PEI data.

“We are very pleased with the overwhelming interest in Sunrise Capital from many prominent investors – the demand for Sunrise III far exceeded the firm’s hard cap,” Megumi Kiyozuka, managing director for the fund, said in a statement. “We believe that $400 million is the right size for us, given our value-added approach to control investing in Japan’s lower mid-market. We look forward to delivering excellent returns for Sunrise III on behalf of all our investors.”

CLSA Capital Partners, which manages over $3 billion of assets, is the private equity arm of the Hong-Kong based brokerage CLSA and has been targeting mid-market opportunities in Japan through its Sunrise Japan fund since 2006.

Monument Group served as placement agent for Sunrise III.