Japan’s J-STAR returns with fourth buyout fund – exclusive

The mid-market specialist is targeting around $386m for its fourth fund since 2006, Private Equity International has learned.

J-STAR, a Tokyo-headquartered private equity firm, is back in market with its fourth buyout fund, Private Equity International has learned.

The mid-market specialist is targeting ¥42 billion ($386 million; €346 million) for J-Star No.4 Investment Limited Partnership, according to a source with knowledge of the vehicle. It collected ¥32.5 billion against a ¥30 billion target for its 2016-vintage Fund III.

J-STAR declined to comment.

The firm seeks control and co-control buyouts of small- and mid-sized Japanese companies, according to its website. Portfolio companies include automotive parts manufacturer Honest Co, clothing retailer Wego and animal hospital JVCC.

J-STAR’s previous funds have received strong domestic support from Japanese commercial banks, insurers, pensions, funds of funds and corporations, according to its website. Japanese investors are warming to private equity, with the $1.5 trillion Government Pension Investment Fund and $700 billion Japan Post Insurance among those expected to ramp up investments.

The majority of capital dedicated to Japan has been raised by domestic players in recent years. Managers collected $1.5 billion across five Japan-focused private equity funds last year and $5.5 billion across 16 funds in 2017, a five-year high, according to PEI data.

Only one of the Japan funds that closed last year was managed by a firm headquartered outside of the country, with US-based Salesforce Ventures raising $100 million for the Salesforce Japan Trailblazer Fund.