European mid-market buyout firm Investindustrial is set to establish a foothold in Japan by the end of the year as it seeks to expand its portfolio companies’ market and investment opportunities in the region.
Investindustrial will open an office in Tokyo – its ninth globally and second in Asia after Shanghai – to be staffed by a team of five investment and operations professionals. It is finalising recruitment for its head of Japan, Private Equity International understands.
“Japan is the final piece, and it works very well as part of the firm’s Middle East and Asia operations improvement team. Why? [Because] our companies are already operating there – and most importantly, the market is opening,” Andrea Bonomi, founder and chairman of Investindustrial’s advisory board, told PEI.
“The Japanese market is opening for family-owned businesses and small and mid-sized companies. The dealflow is very high right now for add-on opportunities, and we are seeing many value creation opportunities for our portfolio companies. You are going to see a lot happening in Japan,” he added.
A growing number of international fund managers have set up shop in Japan recently to expand investor relationships and pursue domestic deals. US buyout shop New Mountain Capital and French asset manager Eurazeo opened offices in the Japanese capital last year.
Investindustrial has completed add-on investments with a total combined enterprise value of approximately €500 million in Asia and the Middle East over the past year, with investee companies now operating 25 plants across these regions, Bonomi noted. It has about 20 staff between Abu Dhabi and Shanghai, which help and support the growth and buy-and-build strategies of its portfolio companies.
The move demonstrates the firm’s “commitment to Asia, strengthens the group’s global infrastructure and reach, and reinforces its dedication to delivering a unique value creation proposition for entrepreneurs and families”, according to a statement.
Since the start of 2024, Investindustrial has invested approximately €2.4 billion of equity in platform investments and acquired 40 add-ons with a combined enterprise value of €4.3 billion.
Bonomi noted the new outpost is “not a capital-raising office”, as the firm has had “a good group of investors from Japan” for more than decade. Nippon Wealth Life Insurance Company is an investor in the firm’s €3.75 billion Fund VII, PEI data shows.
“The search for new capital is a very important element in the industry. Investors today are looking for private equity firms which have a distinctive advantage. The two pillars of our strategy – the domination of Southern Europe and our B2B and industrials investment focus – mean we are well positioned and aligned to find the best investment opportunities… We do three add-ons a month, we’re consistently deploying, which protects us from the cyclicality of the market.”
Investindustrial held the final close on its €4 billion hard-cap for Fund VIII in April this year. Approximately 57 percent of raised capital came from European LPs, 23 percent from North America, and the remaining 20 percent from the rest of the world, including the Middle East. Fund VIII is about 56 percent invested including capital reserved for add-ons.
The European buyout firm opened an office in Abu Dhabi in December to be closer to its partners and explore potential investment opportunities for its platform companies.
AloJapan.com