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Interview Topic |
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Bullish on Japan
Business leaders are moving strategically and investing earlier says Tamotsu Adachi because they are positive and more confident about the future of Japan
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Tamotsu Adachi
Managing Director and
Co-head of Japan buyout advising group
The Carlyle Group
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Not surprisingly, Tokyo-based Tamotsu Adachi, a Managing Director and Co-head of The Carlyle Group’s Japan buyout advising group, is bullish about Japan. Since joining Carlyle in 2003, he has led the buyout team to become one of the most successful private equity funds in Japan and he’s not done yet, pointing to further opportunities arising from the yen’s depreciation.
“Historically the exchange rate between the yen and dollar has been centred between 100-120 yen to the dollar, which is where it is now. I think this is probably the correct range and it means that now is the right time to make an investment in Japan as the yen is good value,” he said.
Added to this value for money perspective is the fact that private equity in Japan is starting to take off, with Japanese companies realizing that PE firms are good partners and can help them divest their subsidiaries or other parts of their business.
“In the past couple of years we’ve seen more and more opportunities in Japan. The recently depreciated yen is helping Japanese companies to improve their performance and that is good for our portfolio companies. Stock price increases are helping us make good exits. So I believe the current environment is very good,” Adachi said.
The increased deal flow is also due partly to the Bank of Japan’s more accommodative monetary policy, he added. “Japan has suffered from a deflationary environment for much of the past 20 years and as a result Japanese companies have wanted to invest later rather than sooner. But government stimulus packages and Bank of Japan policies have changed that.
“We are starting to see a good inflationary environment. Business leaders are moving strategically and investing earlier, aggressively acquiring core businesses because they are more positive and confident about the future of Japan. That’s good for our business because there are many strategic, acquisitive players which would be interested in partnering with or acquiring our portfolio companies. The accommodative monetary policy is also proving beneficial for divesting family-owned businesses trying to exit amid the increase in stock prices,” he added.
Adachi said that the impact of this newfound confidence will start to show in increasing competition for deals in Japan. Global players are already chasing the limited number of larger-sized deals. Smaller-sized deals offer more opportunities but the recent increase in the number of domestic private equity firms will see the marketplace become more crowded.
Carlyle is a unique global PE firm in Japan with a dedicated Japan fund denominated in yen. It targets mid-cap companies in the US$100 million space. Established its first Japan buyout fund in 2001, Carlyle has a successful track record in Japan with a strong commitment to the local market.
“The strength of Carlyle Japan is our long-term commitment to the Japanese market, our experienced investment team with strong local expertise and our One Carlyle global network. When we make an investment, we leverage Carlyle’s global investment experience and expertise to help create value. So we have both local strength and global strength – that is our uniqueness,” Adachi said.
International growth is a priority for many of the companies in Carlyle’s portfolio, particularly those mid-cap, family-owned businesses with succession issues. Even with a good product or service, without the expertise and resources to expand outside Japan, they may run into problems, and this is where Carlyle can help, he said, bringing a global perspective and the means to help them expand overseas.
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Regulatory Update |
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The HKVCA is strongly supportive of – and has been instrumental in the development of – this Amendment, as a positive step to enhance the attractiveness of Hong Kong as a Private Equity hub by simplifying the operating procedures for PE firms based here.
Inland Revenue (Amendment) Bill 2015 (LegCo - Bills Committee)
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Upcoming Events |
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Date: |
June 1, 2015 (Mon) |
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Time: |
09:00 - 17:30 followed by cocktail reception |
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Venue: |
N201, Hong Kong Convention and Exhibition Centre |
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Fee:
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Full member or Limited Partners:
Enjoy ONE FREE pass per company
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Full members/Limited Partners (additional pass) or Associate or Overseas members: HK$3,800
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Members of supporting organisations: HK$4,640
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Non-member: HK$5,800 per person
Group Discount: Register in a group of 3 or above within the same company can enjoy 10% off discount.
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Website: |
cpes.hkvca.com.hk Speaker's bio Full Program |
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CPT: |
6.5 points |
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HKVCA Members Event
Limited Seats Available
Sponsored by: 
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Date: |
June 5, 2015 (Fri) |
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Time: |
08:00 - 09:00 |
Venue:
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Victoria Suite, Hong Kong Club, 1 Jackson Road, Central, HK
(Room reserved under the name of Johnny Chan) |
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Fee: |
Full members (corporate): one free pass per company |
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Full members (additional pass)/ Associate members: HK$280 |
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HKVCA Full Members Event
The HKVCA is co-hosting a workshop with the PRI to explore the relevance of environmental, social and governance (ESG) issues to private equity (PE) investments in Asia. Attendees will be provided with an overview of how ESG issues can be integrated within PE investment processes. They will then have the opportunity to discuss practical applications to Asian investments through a multi perspective panel dialogue and an interactive case study workshop.
Please click here for more details.
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Date: |
June 12, 2015 (Fri) |
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Time: |
12:00 - 14:00 |
Venue:
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The China Club, 14/F, The Old Bank of China Building,
Bank Street, Central, Hong Kong |
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Fee: |
Free for Full members |
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CPT: |
1.5 point |
 
Co-hosted with : 
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Limited Seats Available
Hong Kong Broadband Network – From MBO to IPO in < 3 years.
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Building trust to achieve Win-Win-Win for seller, PE and professional managers
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Clear alignment of interest via unique Co-Ownership structure
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Leveraging the resources of a global private equity firm
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IPO engagement started the day after MBO
Full speaker's bio can be downloaded here.
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Date: |
June 15, 2015 (Mon) |
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Time: |
12:15 - 14:00 |
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Venue:
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The China Club, The Old Bank of China Building,
Bank Street, Central, Hong Kong |
Fee:
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Full members: one free pass per company
Full members (additional pass)/Associate members: HK$450
Non-member: HK$800 per person |
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CPT: |
1 point |
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HKVCA Full Members Event - By Invitation Only
Unique Insights from Real Asset Professionals:
Management of Multi-Asset Funds
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Date: |
June 26, 2015 (Fri) |
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Time: |
12:30 - 14:00 |
Venue:
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JP Morgan Office, 27/F, Chater House,
No 8 Connaught Road, Central, Hong Kong |
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SEC Inspections and Enforcement and Volcker Rule Update
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Lessons from current US Securities and Exchange Commission enforcement and examination trends – including the SEC’s interest in fund expenses, and
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New Volcker Rule “SOTUS” guidance.
Speaker: Ms. Lorna Chen, Partner, Shearman & Sterling
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Date: |
August 31, 2015 (Mon) |
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Time: |
12:30 - 14:00 |
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Venue:
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Shearman and Sterling office, 12/F, Gloucester Tower,
The Landmark, 15 Queen's Road Central, Central, HK |
Fee:
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HKVCA member: HK$200 per person
Non-member: HK$300 per person |
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CPT: |
1.5 point |
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Save the Date
This comprehensive training course is designed for those wishing to increase their knowledge of core fundamentals of private equity and venture capital. The course also refreshes and upgrades the skill set of professionals in the industry.
The modules are led by highly experienced top-tier industry practitioners and experts engaged in years of deal-making, structuring, value-creation in companies and exits. Instructors will draw on real cases to illustrate and share their lessons learnt through trial and error over the years.
The course provides in-depth technical and practical know how on venture capital and private equity.
*Topics include:
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Sept 25 (Fri) - Early stage investment
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Sept 30 (Wed) - Module 1: PE basics
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Sept 30 (Wed) - Module 2: The investment decision
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Oct 13 (Tue) - Module 3: Transaction documentation
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Oct 15 (Thu) - Module 4: Post investment
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Oct 26 ((Mon) - Module 5: LP universe & fund raising and “How private equity fits into the ecosystem of the finance industry”
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Oct 16 (Fri) - Case Study: Pacific Coffee
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Oct 16 (Fri) - Case Study: GE Equity
CPT:3 points per module, 1.5 points per case study
*The above information is subject to change until final confirmation.
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Save the Date
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Date: |
Jan 19, 2016 (Tue) |
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Time: |
18:30 - 21:30 |
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Venue: |
The Hong Kong Country Club |
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Save the Date
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Date: |
Jan 20, 2016 (Wed) |
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Time: |
8:30 - 17:30 (followed by cocktail reception) |
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Venue: |
S421, Hong Kong Convention and Exhibition Centre |
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New Members Welcome
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Full Members
Cedarise Capital Limited
Shaw Kwei & Partners
Shaw Kwei & Partners is a private equity fund manager investing in middle-market companies operating in China and across Asia. After investing, Shaw Kwei & Partners helps companies to grow, develop business strategies, acquire other companies, and raise capital from banks as well as initial public offerings. Our management are pioneers in Asian private equity having managed private equity funds since 1990 and establishing Shaw Kwei & Partners in 1999. With offices in Hong Kong and Singapore, Shaw Kwei & Partners has expertise in complicated corporate finance structures and deep knowledge of Asian business practices. Shaw Kwei & Partners focuses on industrial and service businesses with company valuations between US$20-300 million.
Swan Capital Management Ltd
Swan Capital Management Ltd is the Investment Manager of Swan Asia Credit Opportunities Fund L.P., which will invest in credit opportunities in the Asia Pacific region with a primary focus on the Greater China region. The Fund’s objective is to invest in attractive credit opportunities with cash yield and participation in capital appreciation.
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Associate Members
Merrill Corporation
Founded in 1968 and headquartered in St. Paul, Minn., Merrill Corporation leverages technology and expertise to help our clients share confidential content within their business ecosystem more effectively, address the quickly changing regulatory disclosure environment, and deliver customized communications in regulated industries. Merrill serves the banking, capital markets, insurance, legal, healthcare, energy, and other corporate markets worldwide. With more than 5,000 people in 40 US domestic and 22 international locations, Merrill empowers the communications of the world’s leading companies and the professionals who support them.
SunGard
SunGard Financial Systems provides mission-critical software and IT services to institutions in virtually every segment of the financial services industry. The primary purpose of these systems is to automate the many detailed processes associated with trading, managing investment portfolios and accounting for investment assets. These solutions address the processing requirements of a broad range of users within financial services, including asset managers, traders, custodians, compliance officers, treasurers, insurers, risk managers, hedge fund managers, plan administrators and clearing agents. In addition, we also provide professional services that focus on application implementation and integration of these solutions and on custom software development.
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Recent Events Report
HKVCA 14th Wine Tasting Event
18 May 2015
The HKVCA’s always popular wine tasting event was held once again at the Hong Kong Club on 18 May, 2015. The theme of the evening was “Three Shades of Wine”and the event attracted close to 70 professionals from the private equity and venture capital industries. Special thanks to our sponsors Alter Domus and Clifford Chance. The highlight of the evening was our “Master of Wine”, Debra Meiburg, who took us through a journey of delicious French whites. As always the talk was both entertaining and instructive. Thanks also to our organizing committee and especially Anthony Chan, Alain Fontaine and Marcus Thompson for another very successful event.
HKVCA Luncheon Talk on Brand and Reputation During a Crisis
11 May 2015
An HKVCA Luncheon talk, titled “Protecting Brand and Reputation During a Crisis”, was held on 11th May, 2015 at the China Club. Cara O’Brien, Senior Managing Director at FTI Consulting, delivered the talk, which included discussion of the importance of handling communications appropriately during times of crisis and insight on how to most effectively handle communications should a crisis actually occur. Thirty professionals representing the private equity and venture capital industries attended the event.
HKVCA Members Breakfast Meeting
8 May 2015
On May 8, 2015, our always popular monthly breakfast meeting was held with more than 70 HKVCA members in attendance. We are grateful to our members and guests who supported this great networking event. We would also like to extend a special thanks to our sponsor, I-OnAsia.
Industry News
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Sequoia Among Backers of Huatai’s $5.2bn IPO
Monday, May 18, 2015
(Financial Times by Jennifer Hughes) - Huatai Securities has attracted investments from a group of backers that includes Sequoia Capital, Tencent’s founder and Yale-backed Hillhouse Capital , as the Chinese broker seeks to raise up to $5.2bn in Hong Kong’s biggest float in more than four years.
A group of 13 so-called cornerstones has committed to buying $1.9bn of the share sale, according to people close to the deal, as brokers look to capitalise on their role in China’s stock market rally and the rising volumes that have accompanied it.
View full article here
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Signs of room to grow
Friday, May 15, 2015
(China Daily Asia by Oswald Chan) - Hong Kong should not be complacent because more can be done to further fortify the city’s position in the private equity (PE) fund management industry, believe experts.
“The government could provide a benefit to Hong Kong companies and startups by allowing PE funds to invest their capital in local companies without affecting the fund’s tax exemption for non-Hong Kong investments,” Levack told China Daily. “It should also think about expanding the definition of qualifying funds (for profits tax exemption) to include sovereign wealth funds, pension funds and mainland State-owned enterprises, to enrich the investor base of PE industry in the city.”
“We believe there are even larger gains to be made by (further) changes that allow PE funds to come onshore in Hong Kong,” Levack said. “As the mainland is transitioning from being primarily a destination for inbound investment to being a source of capital for outbound investment, (allowing tax exemption for onshore PE funds will enable) Hong Kong to play an active role in advising cross-border investments from the mainland.”
View full article here
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PAG targets $3b for second Asia fund
Thursday, May 14, 2015
(AVCJ by Tim Burroughs) - PAG Asia Capital has launched its second pan-regional fund and is looking to raise $3 billion. The GP, which is led by Weijian Shan, formerly of TPG Capital, closed its maiden fund at $2.5 billion in 2012.
A hard cap has yet to be set for the new vehicle, sources familiar with the situation told AVCJ. The first investment is likely to be South Korea-based Young Toys. PAG is understood to have agreed to buy the business from Headland Capital Partners for around $200 million.
View full article here
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Neuberger Berman Appoints Former Central Banker Kent Chen To Lead Asia Private Equity Efforts
Wednesday, May 13, 2015
(Press Release) - Neuberger Berman, one of the world's leading employee-owned investment managers, today announced the appointment of Kent Chen as Managing Director and leader of the firm's private equity efforts in the Asia Pacific region.
In this newly-created role based in Hong Kong, Mr. Chen will advise local clients and lead the firm's regional efforts investing in global private equity across a wide spectrum of strategies.
View full announcement here
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