The nine-month old Longreach Group has raised $150 million, the first chunk of a $500 million inaugural fund, to spin out non-core assets from Japan’s technology conglomerates and financial institutions.
The Hong Kong-based private equity firm plans to hold out another year before closing the fund, but it plans to close its first investment within the next six months, said Mark Chiba, the firm’s chairman. Longreach has a number of deals in the pipeline, he says, and like all deals the firm plans to finance, each has an enterprise value between $400 million and $1 billion. Longreach will invest up to $300 million in equity capital to take a controlling position in the portfolio company, then leverage the deal with as much debt as the deal requires.
“Real opportunity is building in Japan,” Chiba said. “The challenge is to build a private equity firm that can build strong relationships locally and strategically driven deal flow, but also operate as a global firm and deliver returns.”
Chiba is the former president and chief executive of UBS Securities in Japan, and the former head of its Japanese investment banking division. Chiba, in Hong Kong, will manage the fund alongside two partners in Tokyo. One of them, Yasuyuki Miyoshi, was most recently the head of Merrill Lynch’s Japanese restructuring practice, while Masamichi Yoshizawa, the Longreach Group’s third managing director, led Morgan Stanley’s technology investment banking group in Japan.
Thus far, institutions that will likely co-invest in deals with Longreach have bought into the fund. The remainder of the fund’s capital is expected to come from institutional investors in the United States, Japan and throughout Asia.