Advantage Partners, a Japan-focused buyout firm established by former Bain consultants, is looking to raise a $2 billion fund to “make influential minority investments” in listed Japanese companies, according to investors in private equity funds advised by the firm. The new fund is named “Advantage Partners Inflexion Initiative,” according to a note received from a third party.
In the memo, Advantage said 15 years of building local expertise and networks have enabled the team to “see tremendous deal flow, particularly with respect to public securities, but we have had to pass on these opportunities due to our buyout fund and this has limited our ability to capitalise on this attractive segment of the market”.
“Therefore, after conducting extensive research and receiving many inbound requests from our limited partners, we have decided to formally invest in public securities through the establishment of new funds, with a dedicated team of investment professionals tailored to the investment strategy,” the note said.
One investor said the firm was planning to establish a 10-person team for the new strategy. Akira Iwamoto, a member of the Advantage buyout team, will be part of the new effort.
Commenting on the new strategy, the investor said he would prefer to focus on their original buyout business but was sympathetic towards the firm's move into the listed equity market: “The environment in Japan is becoming tougher for pure private equity plays,” he said.
Advantage, which is led by representative partners Taisuke Sasanuma and Richard Folsom, feels it has a competitive advantage in the listed market. “None of the traditional buyout funds, hedge funds, or mutual funds can fully capitalise on these opportunities. We will be a first mover in this segment in Japan, as we were in the buyout space,” it said in the note to LPs.
Advantage Partners, often referred to as one of the “big three” independent private equity firms in Japan, raised $1.9 billion for a fourth buyout fund earlier this year.
CHINA LAUNCHES QUARTET OF FUNDS
China's State Council has approved four new private equity funds to support business in the energy, innovative manufacturing and high technology sectors, according to weekly Chinese business publication Caijing Magazine. The Shanghai Financial Fund will reportedly raise Rmb20 billion (€1.9 billion; $2.6 billion); the Guangdong Nuclear Power and New Energy Fund and the Shanxi Coal Fund will each raise Rmb10 billion; and the Sichuan Mianyang High Technology Fund will raise Rmb6 billion. Also approved was the China-Singapore Suzhou Industrial Park Fund, which will raise up to Rmb10 billion.
KKR LEADS CHINA CEMENT DEAL
Titan Cement, an entity controlled by affiliates of US buyout firm Kohlberg Kravis Roberts, has invested $115 million (€83 million)for a minority stake in Henan-based cement producer Tianrui Cement, according to a statement. In connection with the investment, an international banking syndicate led by JPMorgan committed an additional $335 million in “long-term financing”, bringing the deal's total consideration to $450 million. The statement said that the loan facility is “the first sponsor-related, RMB-denominated long-term syndicated loan arranged by international banks in China”. Tianrui Cement, one of China's largest cement producers, has developed a production process based on new suspension pre-heater technology, which it claims is more energy efficient and environmentally friendly than those used by rivals.
NAVIS SURPASSES $1BN
Asian-focused Navis Capital Partners has closed its fifth fund on more than $1 billion (€720 million), according to a statement issued by Navis investor CDC, the emerging market fund of funds. The buyout firm has more than tripled the $315 million raised for its previous fund in 2004. UK government-backed emerging markets fund of funds CDC committed $70 million to the latest Navis fund. The commitments bring CDC's overall investment in South East Asia to over $275 million. Navis was established in 1998 by former Boston Consulting Group partners to focus on private equity investments in Asia. The fund will invest in mid-market companies requiring equity investments of between $15 million to $50 million.
PE JOINT VENTURE LAUNCHED IN JAPAN
Bank and Development Bank of Japan, three Japanese financial institutions, have agreed to launch a joint venture to evaluate and analyse private equity funds. It will offer investment advisory and discretionary management services. Private Equity Funds Research and Investments aims to manage ¥300 billion (€1.9 billion; $2.6 billion) of third-party funds in five years, Michiyori Fujiwara, a spokesman for Nomura, said. Set for launch in January 2008, the joint venture is looking for commitments from corporate pension funds, regional banks and trusts companies as well as high-net-worth individuals, Fujiwara said.
ACTIS TARGETING GLOBAL, REGIONAL FUNDS
Actis, the emerging markets fund manager, is marketing a global private equity fund, which has a target of at least $1.25 billion, according to investors familiar with the group's plans. In addition, Actis is looking for another $1.25 billion in commitments to four separate regional funds dedicated to China, South Asia, Africa and Latin America, these sources say. Actis' largest fund to date is a $355 million African fund. Since the spinout from UK government investment agency CDC in 2004, Actis, led by senior partner Paul Fletcher, has raised an aggregate $1.6 billion from third party investors.
CITIC GETS GREEN LIGHT FOR PRIVATE EQUITY BUSINESS
Hong Kong-based CITIC Securities – a subsidiary of the China International Trust and Investment Company, one of the largest investment arms of the Chinese central government – has received state approval to set up a private equity business on a trial basis, according to the China Securities Journal. The brokerage will spend ¥831 (€79 million; $110.5 million) to set up the unit, and will invest its own funds. The Journal quoted an unnamed source at CITIC who said the brokerage will likely be able to invest about 15 percent of its net capital, or ¥6 billion, in private equity.
GLOBESPAN FUND TO INCLUDE JAPAN INVESTMENTS
Globespan Capital Partners has closed its fifth fund with commitments of $380 million (€277 million), giving the US venture firm a total of $1.1 billion under management. The oversubscribed fund was marketed to existing and new limited partners for “a few quarters”, according to managing director and co-founder Andy Goldfarb. The latest fund's limited partners – several of which are new – include state and corporate pension funds, university endowments, fund of funds such as Portfolio Advisors, and international pension funds from Europe and Asia, as well as Japanese companies. The firm's first two funds were raised entirely from Japanese investors. The fund's investment strategy will be slightly different than previous Globespan funds, which typically make investments of $250,000 to $15 million in tech companies between seed and Series C stages. “It's the same strategy but we've augmented it to include direct investments in Japanese companies,” said Goldfarb.
GEM RAISING $1BN RESOURCES FUND
The Global Emerging Markets Group (GEM) is currently raising a $1 billion (€724 million) fund with the China International Trust & Investment Company (CITIC). The fund will target non-oil and non-gas natural resources in China, Southeast Asia and Africa. The fund will invest in incumbent mines, and also make green field investments, said GEM managing director Suneel Kaji. Kaji said GEM and CITIC are interested in hard mineral resources, including coal, zinc and potassium. CITIC, the investment arm of the Chinese state, will bring to the partnership its access to a number of state-owned mines that are slated for the divestiture block. Both GEM and CITIC will be anchor investors for the new fund, which is expected to close “well into the new year”, Kaji said. The fund's LPs will likely include institutional investors and hedge funds, preferably those with an appetite for co-investment.
GENERAL ATLANTIC HIRES IN HONG KONG, MUMBAI
US private equity firm General Atlantic has expanded its Asian operations with two new managing directors. Former Warburg Pincus managing director Jeff Leng will join its Hong Kong office and former McKinsey managing director Ranjit Pandit will join its Mumbai office. Leng worked on Warburg Pincus' China investments since 1999, before which he worked in the investment banking division of Morgan Stanley. He has also held positions at China Southern Securities and the Ministry of Aviation, and has served on the boards of pharmaceutical company Hayao Group, China Hui Yuan Juice and medical device maker Lepu Medical. Pandit worked at consulting firm McKinsey since 1980; he was most recently chairman of its India division. He will aim to improve the operations of the firm's portfolio companies in the region.
BLACKSTONE COMPLETES CHINA DEAL
US alternative assets giant The Blackstone Group has made its first investment in China, taking a 20 percent stake in China National Bluestar Corporation, a subsidiary of state-owned China National Chemical Corporation, for $600 million (€435 million). Blackstone's China head Anthony Leung and Ben Jenkins, a former director of German chemical company Celanese, will join the company's board. A source close to Blackstone said this is a strategic investment in China. Blackstone has made several investments in the chemicals sector. It partially exited Celanese through an IPO in 2005 for $800 million and bought water treatment company Ondeo Nalco in 2003 for $4.2 billion as part of a consortium. Blackstone has had an eventful year in China, securing a $3 billion investment in its IPO from the Chinese government. It also advised the government on its acquisition of a three percent stake in UK bank Barclays for $3 billion to aid its bid for Dutch bank ABN AMRO.
ABRAAJ NEARING $1BN FOR INFRASTRUCTURE
Dubai-based buyout firm Abraaj Capital is approaching a $1 billion second close for an infrastructure and growth capital fund, which could raise up to $2 billion. The fund, managed by Abraaj, is co-sponsored by Deutsche Bank and Ithmaar Bank, an investment bank based in Bahrain. The infrastructure fund held its first close on $500 million in February. The fund is being raised on Shariah principles and its scope is Abraaj's key geography of the Middle East, North Africa and South Asia, which includes Turkey and the sub-continent. However, the fund will target the MENA region and Turkey specifically.