Advantage Partners (HK) Limited, the parent company of Japanese private equity firm Advantage Partners Group (AP Group), has agreed to sell a 14.9 per cent stake to local financial services major Tokyo Century.
As part of the transaction, which is expected to close in January 2020, Tokyo Century will acquire new and existing shares in the general partner (GP) and secure a seat on its board.
“After the formation of the relationship, AP will continue to operate independently with majority ownership retained by its founder group and employees. The investment decision making processes of AP Funds will not change as a result of the relationship,” Advantage Partners said in a statement.
Advantage Partners manages buyout funds focused on Japan, Greater China and Southeast Asia as well as a privately structured investment fund for listed Japanese companies. It has managed over 400 billion yen ($3.7 billion) in commitments and invested in more than 100 companies.
Tokyo Century has been a limited partner in the Japanese PE firm’s funds.
“Having balance sheet capital is critical to providing long-term stability,” Advantage Partners said. The investment from Tokyo Century will see the duo increase the capacity of PE funds and investment opportunities and provide more management support services to portfolio companies.
The limited partner said the alliance is in line with its Fourth Medium-Term Management Plan, which commenced in 2019 in order to achieve sustainable growth.
“Tokyo Century foresees corporate investment business as an area with further growth prospects providing solutions to social issues, management strategies, and management reforms driven by the recent business succession needs within small to mid-sized enterprises and the carve out needs derived by the increasing focus on the importance of selection and concentration process within large enterprises,” it said.
Paring management stake is part of a transition process that AP Group started several years ago to move from a founder-controlled firm to a long-term sustainable institutional platform, its co-representative partners, Taisuke Sasanuma and Richard Folsom, said in a statement.
“We had already transitioned a portion of the firm’s ownership from the founders to non-founder partners and employees in the last couple of years, as well as transitioned governance and decision-making of the firm from just the two founders to include the broader group of partners and senior management.”