NEW YORK – Patricof & Co. Ventures Inc. has launched a $160 million-targeted private equity fund that will invest in Japanese venture capital, buyout and growth equity deals.
Patricof is collaborating with the owner of a Tokyo for-profit business school called Globis Corp. to raise Apax Globis Japan, which should hold a first close in July, Patricof Partner Eugene Matthews said.
The fund is one of several recent efforts to take advantage of what some industry professionals predict will be a wave of divestitures and consolidations across Japan and Asia.
Chase Capital Partners and the Carlyle Group currently are raising large Asian buyout funds, but both groups most likely will avoid Japan. Efforts that will invest exclusively in Japan include newcomer Unison Capital Inc., which is run by ex-Goldman, Sachs & Co. investment bankers and is looking to raise a $400 million buyout fund, and a joint venture between 3i Group and Industrial Bank of Japan Ltd., which is raising a $200 million Japan buyout fund.
Globis is headed by Yoshito Hori, who, in addition to owning the business school, also operates a $5 million private equity fund of his own called Globis Capital. Messrs. Matthews and Hori will run Apax Globis. Mr. Matthews has advised Patricof about Japan for the past two years and speaks fluent Japanese.
The fund will look to raise capital from limited partners in Japan, the United States and Europe. Recent financial deregulations in Japan, popularly referred to as the Big Bang, allow greater foreign ownership of companies. Apax Globis will seek to buy stakes of between 20% and 80% in Japanese companies, Mr. Matthews said.
Big Bang reforms also allow Japanese pension funds to invest in private equity. Mr. Matthews predicted Japanese pension money would comprise part of the fund’s capital, although no commitments by Japanese L.P.s have been made as yet. Mr. Matthews also said Japanese banks are prepared to supply leverage for buyout transactions, but Apax Globis will seek financing from U.S. banks, as well.
The presence of a local partner will be key in gaining the trust of Japanese companies’ management, Mr. Matthews said, adding Globis is a well-known name in the Japanese business community.
Buyouts have long been anathema in Japan, but the protracted recession in that country has forced companies to look for ways to increase efficiency, and spinning out corporate divisions is one strategy for achieving that goal. “U.S. concepts that are successful usually go to Japan,” Mr. Matthews said. “[Buyouts] may not have worked in the past, but they may work in this new environment.”
Patricof also announced that Thomas Hirschfeld and George Phipps would be named managing directors of the firm and partners of the $410 million APA Excelsior V fund (story page 34).
Both men were promoted from within the firm. Patricof now has 11 managing directors. Mr. Hirschfeld will focus on investment opportunities in the Internet sector, while Mr. Phipps specializes in telecommunications companies.