Key Takeaways
- • H&Q Partners invested about 40 billion won and Helios PE about 10 billion won in Kyulux, a Fukuoka-based developer of next-generation OLED light-emitting materials, according to investment bank industry sources cited by Maeil Business Newspaper.
- • IMM Investment Japan (IMMJ) led the Series D investment in Kyoto Fusion Engineering in September through its Korea-Japan Convergence Fund, which was built with Korean and Japanese investors.
- • Domestic PEFs are pursuing Japanese deep-tech and small-manager companies because of their technology depth, relatively low valuations, and a weak yen that stretches investment dollars, while Japan's M&A market is expanding.
- • Japanese government national-security screening under the Foreign Exchange Management Act has blocked or delayed Korean-backed control deals, including IMM PE's canceled Yasojima acquisition and MBK Partners' suspended Makino Milling acquisition.
Summary
Domestic private equity fund managers are increasingly directing capital into Japan, targeting deep-technology companies and small specialist manufacturers with proprietary technology. According to investment bank industry sources cited by Maeil Business Newspaper, H&Q Partners and Helios PE invested in Kyulux, a Japanese developer of next-generation OLED light-emitting materials. H&Q Partners contributed about 40 billion won and Helios PE about 10 billion won. Bnw Investment and Samsung Venture Investment had earlier invested about 40 billion won in June.
Kyulux was founded in Fukuoka in 2015 on research from Kyushu University. Its third- and fourth-generation OLED technology, including its HyperFluorescence platform and thermally activated delayed fluorescence (TADF), can achieve high luminous efficiency without the iridium and other rare metals that second-generation phosphorescent materials depend on. The company has close Korean ties: Samsung Display and LG Display participated in a 2016 Series A round led by Samsung Venture Investment. Lee Jung-gil, formerly an executive at Samsung Electronics' M&A and display divisions, became CEO last October, and Kim Sam-jin, former CFO of Samsung Electronics and SK Japan, joined in December. The company is not yet in full-scale mass production, but its partners expect business cooperation with Samsung and LG panel makers to deepen once shipments ramp.
IMM Investment Japan led the Series D round for Kyoto Fusion Engineering, a Japanese deep-tech firm with the technology and plant engineering capabilities needed to commercialize nuclear fusion power, in September. The deal was made through IMMJ's Korea-Japan Convergence Fund, which includes Korean and Japanese investors. Per Speeda, a Japanese venture data platform, the median funding round for Japanese startups last year was 62.4 million yen (about 530 million won), slightly down from 77.93 million yen the prior year. Domestic startup medians doubled to 4 billion won from 2 billion won over the same period. Sources say the combination of lower valuations and a weak yen allows investors to acquire more technology per dollar.
Japanese small manufacturers also see value in Korean capital and business partners, particularly Korean finished-goods companies that can expand their sales channels overseas. Dealmaking is not without obstacles. The Japanese government has tightened review of foreign control of management rights on national security grounds. IMM PE and TKG Huqemes agreed to buy Yasojima, a Japanese specialty engineering plastics and semiconductor materials maker with a 100% stake valued at about 500 billion won, but the deal was canceled in January of this year. TKG Huqemes cited differences in key conditions with the seller, though observers said prolonged government foreign-investment review pushed the seller toward a local management company. In April, the Japanese government recommended suspending MBK Partners' acquisition of machine tool maker Makino Milling under the Foreign Exchange Management Act, due to dual-use technology concerns. MBK later passed screening by acquiring aluminum-based company Artemira for about 130 billion yen including debt.
Kyulux was founded in Fukuoka in 2015 on research from Kyushu University. Its third- and fourth-generation OLED technology, including its HyperFluorescence platform and thermally activated delayed fluorescence (TADF), can achieve high luminous efficiency without the iridium and other rare metals that second-generation phosphorescent materials depend on. The company has close Korean ties: Samsung Display and LG Display participated in a 2016 Series A round led by Samsung Venture Investment. Lee Jung-gil, formerly an executive at Samsung Electronics' M&A and display divisions, became CEO last October, and Kim Sam-jin, former CFO of Samsung Electronics and SK Japan, joined in December. The company is not yet in full-scale mass production, but its partners expect business cooperation with Samsung and LG panel makers to deepen once shipments ramp.
IMM Investment Japan led the Series D round for Kyoto Fusion Engineering, a Japanese deep-tech firm with the technology and plant engineering capabilities needed to commercialize nuclear fusion power, in September. The deal was made through IMMJ's Korea-Japan Convergence Fund, which includes Korean and Japanese investors. Per Speeda, a Japanese venture data platform, the median funding round for Japanese startups last year was 62.4 million yen (about 530 million won), slightly down from 77.93 million yen the prior year. Domestic startup medians doubled to 4 billion won from 2 billion won over the same period. Sources say the combination of lower valuations and a weak yen allows investors to acquire more technology per dollar.
Japanese small manufacturers also see value in Korean capital and business partners, particularly Korean finished-goods companies that can expand their sales channels overseas. Dealmaking is not without obstacles. The Japanese government has tightened review of foreign control of management rights on national security grounds. IMM PE and TKG Huqemes agreed to buy Yasojima, a Japanese specialty engineering plastics and semiconductor materials maker with a 100% stake valued at about 500 billion won, but the deal was canceled in January of this year. TKG Huqemes cited differences in key conditions with the seller, though observers said prolonged government foreign-investment review pushed the seller toward a local management company. In April, the Japanese government recommended suspending MBK Partners' acquisition of machine tool maker Makino Milling under the Foreign Exchange Management Act, due to dual-use technology concerns. MBK later passed screening by acquiring aluminum-based company Artemira for about 130 billion yen including debt.
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