First Round: Getting crafty in Tokyo

Private equity participants in every city have their favourite watering holes. In London it’s Mayfair’s exclusive The Arts Club. In New York it’s the trendy Monkey Bar. And in Tokyo it’s… well, First Round could tell you, but then it would have to… you know… and it really wouldn’t want to go that far.

In the backstreets of a fashionable Tokyo district, First Round recently joined an exclusive evening with the movers and shakers of the Asian private equity world. Over beverages and barbequed chicken skewers, First Round mingled with portfolio managers from Japan’s biggest institutional investors and with primary and secondaries GPs from around Asia, discussing the day’s most pressing issues, such as how much Japanese teenage fashion had changed over the last two decades (not one bit by the sounds of it).

Talking shop, First Round was intrigued to hear about at least four fund restructurings underway in various Asian markets. Also overheard was that at least one local GP planned to hit the fundraising trail this year, and that Japan’s big two institutional investors were preparing to begin large-scale investments in private equity, including sizeable allocations to secondaries, slated for sometime next year. Did First Round hear that figure would be high as 40 percent, or was that the level of alcohol content of some of the drinks behind the bar? Difficult to say…

As the night progressed, First Round was delighted to learn the preferred tipple among Tokyo’s alternatives crowd was craft beer.

The libation of choice? A regional double IPA known for its hoppy tones. At a whopping 8.5 percent, the level of the beer’s alcoholic content was somewhat akin to the average hurdle rate for funds managed by those around the table. And judging by some of the conversations First Round was privy to, that’s a rate it senses none of the GPs around the table were having trouble achieving.