Daiwa Securities SMBC forms JV with Quantum

The two firms will raise a ¥30bn fund to invest in Asian tech companies.

Daiwa Securities SMBC Principal Investments and Quantum Leaps have teamed to form Daiwa Quantum Capital, a joint venture that will launch a ¥30 billion ($305 million; €225 million) private equity fund focused on making growth investments.

Daiwa will hold a 51 percent stake in the fund management company and Quantum 49 percent.

The fund will provide risk capital to technology-oriented companies with high growth potential. The fund will act as a bridge between Asia and Japan, the firms said in a statement.

It will focus on investments in Asian companies and help them to grow by acquiring technology and management skills from Japan. The fund will also assist Japanese companies in expanding their businesses in Asia. It will commit about 30 percent of its capital to Japanese companies and the remainder in other Asian economies.

Now more than ever, we need bold initiatives that will spur innovation in Japan and Asia.

Nobuyuki Idei

Daiwa Quantum Capital Partners I is to be established in early April, with fundraising scheduled to begin in June 2009. Daiwa Securities SMBC Principal Investments will commit about 30 percent of the fund’s capital.

“The financial turmoil triggered by the sub-prime mortgage crisis continues to have serious and wider-ranging negative repercussions. Now more than ever, we need bold initiatives that will spur innovation in Japan and Asia,” said Nobuyuki Idei, the founder and chief executive officer of Quantum Leaps. He added that the joint venture “aims to bring together the technological prowess of Japanese companies with the growth potential of Asian economies to create new value”. 

Daiwa Securities SMBC Principal Investments is the investment arm of Daiwa Securities SMBC, an investment banking joint venture between Daiwa Securities and the Sumitomo Mitsui Banking Corporation. The firm invests in non-performing loans, real estate, clean technology and private equity. Thus far, it has invested more than ¥1 trillion.

In June 2008, Daiwa Securities invested $80 million in Fang Fenglei’s $2.5 billion Hopu USD Master Fund I and Daiwa Securities SMBC committed $20 million to the same fund. Hopu is focused on opportunities arising from the restructuring of state-owned enterprises and the rapidly growing private sector in China.

In January, parent company Daiwa Securities revised its ambitions of raising a ¥500 billion private equity fund in partnership with The Blackstone Group, citing a difficult fundraising environment. The group was then looking to launch its own funds of up to ¥30 billion, Daiwa Securities chief executive Shigeharu Suzuki, told Reuters.

Established in 2006, Quantum Leaps is an advisory firm providing services to Japanese and other Asian businesses. Idei is the former chairman and group CEO of Japanese electronics giant Sony.