Press Release
July 29, 2004
Final Closing of Advantage Partners' 3rd Japan Buyout Fund
Advantage Partners, Inc. ("AP") and APM Co., Ltd. (a joint venture between AP and Marubeni Corporation) are pleased to announce the final closing of their 3rd private equity fund, with total commitments of 46.5 billion Yen on July 23, 2004.
The fund received a high level of interest from both Japanese as well as non-Japanese institutional investors, including financial institutions, insurance companies and pension funds, and closed with between 20 and 30 investors. The amount of capital raised is in line with the original target, which will allow the fund to invest, with leveraged financing, in 12 to 15 middle market acquisitions and buyouts with enterprise values of between 10 billion and 50 billion Yen on average. As a result of closing in July, in order not to extend beyond the first fiscal year end of the fund, there were a number of investors who were turned away because of the deadline.
The Japanese Private Equity Market has been developing rapidly since 1997. Large Japanese corporations are now moving beyond the stage of contemplation and into actually implementing the restructuring of their business portfolios. Independent mid-size companies are also looking aggressively for alternative sources of financing and partners to help them achieve higher levels of competitiveness. At the same time, there are many companies among the non-performing loan portfolios of the banks that have core competitive strengths and can be revived if the debt can be restructured. These trends, combined with political and governmental momentum to move the Japanese economy on to a strong recovery, have led to an increasing number of investment opportunities for private equity funds.
Within this market environment, AP, as a pioneer in the private equity market in Japan, will continue to aggressively pursue these opportunities. Specifically, AP will target the following areas of opportunity: 1) Non-core divisions and subsidiaries of large corporations, 2) Independent mid-size companies facing changing markets and successorship issues, and 3) Companies going through legal restructurings. Target industry sectors will include: 1) Food, consumer products and other general manufacturing industries where are markets are mature and require sophisticated marketing, 2) Financial services, pharmaceuticals, healthcare, and other sectors where deregulation and other factors have lead to dynamic market changes, and 3) Outsourcing services, information services, lifestyle services and sectors where growth is anticipated.
Advantage Partners aims to improve the profitability and performance of each individual company in which the fund invests, and through this activity, contribute to the overall economic recovery in Japan.
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About Advantage Partners
Advantage Partners is a private equity investment firm founded in 1992. The firm manages private equity funds that focus on investing in acquisitions, buy-outs, buy-ins and other private equity opportunities in Japan. Prior to 1997, the firm focused on making direct investments of partner capital in a small number of portfolio companies, in which partners took an active role in management. As deregulation in Japan began to make it possible to invest in buy-outs and acquisitions via a limited partnership vehicle, Advantage Partners raised its first fund of capital from outside limited partners in 1997 (3.0 billion yen), which was the first buy-out fund in Japan. The firm raised a second fund in 2000 (18.0 billion yen), and just completed the raising of its third fund in July 2004 (46.5 billion yen), continuing the successful investment strategy and philosophy of the first two funds.
The founders and many of the partners/principals of Advantage Partners previously worked as management consultants with a large number of companies across a wide range of industries in Japan, helping them to achieve substantial improvements in earnings and corporate value. This extensive experience showed that a combination of strong management, sound fundamental business analysis, focused strategy and aggressive action was able to significantly improve a company's profitability and corporate value. Advantage Partners' strategy is to combine these proven techniques of corporate value creation with leading-edge financial engineering to increase profitability and build long-term value in portfolio companies, leading to superior returns for investors.
Advantage Partners believes that the quality and quantity of the team members it has assembled give it a substantial advantage competing in the private equity market in Japan. The firm has a team of 25 highly qualified professionals, with prior experience in consulting, operating management, banking, investment banking and accounting. The team has developed and refined its approach and methodologies for evaluating, structuring and executing deals, as well as for value creation after acquisition and successful exit.
