The 9-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 fund its first investment within the next six months, says Mark Chiba, Longreach chairman. Longreach has a number of deals in the pipeline, he says, with enterprise values of between $400 million and $1 billion.
Longreach will invest up to $300 million in equity capital to take a controlling position in each portfolio company and then leverage the deal with as much debt as the deal requires.
“Real opportunity is building in Japan,” Chiba says. “The challenge is to build a private equity firm with strong relationships locally, but also operate as a global firm and deliver returns.”
Chiba is the former president and CEO 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, Longreach’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.