MUFG to Establish Equity Fund to Invest in Japanese Growth Companies
Mitsubishi UFJ Financial Group (MUFG), MUFG Bank, and Mitsubishi UFJ Trust and Banking Corporation (MUTB) have announced that they would establish an equity fund to principally invest in middle and later-stage startups (growth companies) in Japan.
For Japan’s sustainable economic growth, it is essential to create and develop startups. This will require ample and diverse funding options and sources tailored to each growth stage. In global markets such as the US, equity investing in growth companies is viewed as an attractive asset class and investors provide ample growth and risk capital. Such a market structure has greatly contributed to the emergence of unicorn companies. Attractive returns to investors have encouraged further investment, leading to a virtuous cycle of growth and distribution.
In contrast, in Japan, while venture capital firms (VC), synergy-driven corporations and their venture capital arms (CVC) have principally invested in seed and early-stage startups, only a limited number of investors provide large-scale patient capital to growth companies. Due to the market structure, Japanese startups often struggle to achieve sufficient growth, resulting in a lack of creative destruction.
Endeavoring to develop the Japanese market, MUFG has decided to establish the Fund to invest in equities targeting Japanese growth companies. The investment team will be led by a Chief Investment Officer (CIO) to be appointed through external recruitment and will start fund management with LP investments from MUFG Bank and MUTB. Additionally, MUFG plans to invite LP investments from Japanese and international investors, envisioning a total fund size of 50 billion yen.
MUFG’s key aims for the Fund
- Create connections: Connect Japanese growth companies with Japanese and international investors.
- Develop investees and markets: Develop investees and Japanese markets by leveraging the capabilities of the MUFG Group.
- Enhance returns: Deliver and enhance returns to Japanese and international investors.
Through this initiative, MUFG will encourage the supply of growth and risk capital to Japanese startups and contribute to promoting Japan as a leading asset management center.
Norbert Gehrke
