Secondary Fund Investments
Ant Capital Partners is a leading secondary investment professional that established a full-fledged secondary fund in Japan and manages the largest secondary private equity funds for such as LPs interests in venture capital and buyouts funds. In addition to the needs of global institutional investors to liquidate their fund assets, which have increased along with the expansion of alternative investments, recently the movement toward GP-led fund restructuring more occurs, and investment opportunities are expanding globally.
As for the organizational structure of our funds, since the establishment of Bridge No.6-B Fund (August 13th, 2021), the front office function in investment activities has been transferred to “Bee Alternatives Limited,”, an independent manager dedicated to secondary private equity investments, newly established by members from our Solution Investment Group who inherited our investments know-how, and we collectively provide various optimal liquidity and fund restructuring solutions to global investors and GP.
| Bee Alternatives Limited HP | ： | https://bee-alt.com/EN/home |
- Example Fund Investments
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Tightening of financial institution regulations
- Reduction of risky assets through application of Basel banking regulations, the Volcker Rule, etc.
- Reduction of risky assets through insurance company solvency regulations
Mergers and reorganizations of financial institutions
- Adjustment of fund investment position through mergers or reorganizations
Changing of existing investor portfolios
- Adjustment of investment fund position through rebalancing of portfolio
- Adjustment of specific vintages, sectors, etc. within investment funds
- Disposition from standpoint of reducing business costs associated with tail-end investment funds
Changes to pension plan
- Selling of portfolios beginning with assets decreasing as a result of plan changes
Case Studies
case 01
Liquidation of global PE fund investment holdings (domestic institutional investor)
Investments were made in global PE funds in the latter half of the 2000s when PE investments were popular, but a strong J-curve effect is suppressing dividends. This year’s numbers are expected to be in the black, so the hope is to take the opportunity to liquidate the investment holdings.
- The seller is a domestic institutional investor. Since the latter half of the 2000s, it had invested in several global PE funds through a fund of funds, but dividends were not paid as expected due to a strong J-curve effect.
- A report is issued quarterly on the status of the funds, but it is complex and all in English. The person who was in charge at the time the investments were made has already moved to a different department, and it is a struggle to even manage profit and loss.
- The full-year business results are better than normal this year, so the hope is to take this opportunity to liquidate the investment holdings.
- Ant Capital Partners has experience with and a track record of investing in many domestic and overseas PE funds and was able to provide an appealing price. We also conducted negotiations with an intermediary of the fund of funds and purchased the investment holdings in a timely fashion.
case 02
General partnership restructuring (domestic venture fund)
An investor whose internal rules make it difficult to extend a partnership agreement beyond its stipulation will not extend a partnership. At the same time, expectations are increasing with respect to an IPO of the main portfolio, and the venture capital fund manager, who is the general partner, hopes to maximize returns.
- The venture capital fund was established prior to the economic downturn precipitated by the Lehman Brothers bankruptcy, and growth of the portfolio was somewhat delayed, but expectations were increasing with respect to an IPO of the main stock before the fund matured, so the investors were discussing another extension of the agreement.
- Particularly among investors looking to liquidate, there were those whose internal rules would not allow another extension, so they insisted upon liquidation of the fund, which created a major problem for the venture capital fund.
- Ant Capital Partners has an extensive track record with such transactions and through discussions with the general partner of the fund was able to propose a solution adjusting stakeholder interests. As a result, Ant Capital Partners took over the fund holdings of investors that were unable to agree to re-extend the agreement and was also able to provide sufficient time for future fund management by modifying the fund’s partnership agreement.
case 03
Bulk trading (domestic business company)
A certain company wants to liquidate fund holdings that other secondary funds are unable to consider. Moreover, there are multiple holdings, and they want to do a bulk trade before the end of the fiscal year one month later.
- The seller, a business company, had invested in various funds and held several for which it had already secured returns and hoped to liquidate them due to the investments losing their meaning and the increasing burden of monitoring them.
- As these were overseas venture funds, growth funds in emerging markets and the like, there was very limited information on the stocks. On top of that, the transaction would be complicated due to the requirement of investor registration in the countries where the investments were located.
- The balance of the fund holdings was also small, so other secondary funds had turned down the transaction, making the fund holdings extremely illiquid.
- Ant Capital Partners proposed a bulk transfer of multiple fund holdings based on our policy of providing solutions no matter how small or illiquid the investment. We also completed everything from due diligence to signing of the transfer agreement within the short one-month time frame and were able to satisfy the needs of the seller.