J-STAR smashes $270m target for third fund – Exclusive

The Japan-focused fund is 50% larger than its predecessor.

Tokyo-based private equity firm J-STAR has held a final close on its third buyout fund on over ¥33.25 billion ($298 million; €272 million) hard-cap, Private Equity International has learned.

The firm launched J-STAR No. 3 Investment Limited Partnership in July last year with a ¥30 billion target and held a first close on around ¥15 billion in end-2016. J-STAR No. 3 is significantly larger than its predecessor, which closed ¥20.4 billion against a ¥15 billion target.

J-STAR secured ¥32.5 billion of commitments from investors; the firm also put in ¥750 million to its latest fund.

J-STAR No. 3 attracted new investors, such as regional banks, as well as re-ups from existing investors including global family offices, funds of funds and superannuation funds, reflecting a stronger appetite for Japanese private equity, J-STAR chief executive officer and managing partner Gregory Hara told PEI. Sixty percent of fund commitments came from international LPs, while 40 percent were from domestic LPs.

“Aside from better economic figures in Japan, investors are realising that a consolidation play is happening in the Japanese market. A lot of founder owners are looking to private equity to increase their company efficiency and are turning to M&A,” Hara said.

The firm expects to make 10 to 15 deals from the fund in Japan’s lower mid-market and will focus on a buy and build strategy. Earlier this month, J-STAR struck its first deal from the fund, acquiring veterinary clinic Fuji Field. Financial details of the transaction were not disclosed, but the firm typically makes equity investments of between ¥1 billion and ¥3 billion.

Evercore Private Funds Group served as exclusive global placement agent for the fundraise. Simpson Thacher & Bartlett LLP served as US legal counsel, Baker & McKenzie (Gaikokuho Joint Enterprise) served as Japan legal counsel, and KPMG was J-STAR's Japan tax advisor.

The story has been amended to show that J-STAR's original target for its third fund is $270 million.