Investment Policy
Investment Policy
Make good companies better
T Capital Partners is a private equity investment firm focusing on excellent medium- and small-sized companies which produce steady results. Based on mutual trust between us and investee management, we support further growth of the investee as a good partner with assistance from our members who have varied backgrounds and industry knowledge.
Investment Target
・ We mainly invest in companies which have a major business base in Japan and are expected to generate a stable cash flow and achieve sustainable growth in the medium to long term.
・ We invest in a wide variety of business categories (no focus on any particular business).
・ The investment amount per investee is 4 to 14 billion yen, and the corporate value of potential investees is 10 to 50 billion yen, in principle.
・ We invest in companies to independently own a majority of shares thereof, in principle.
Types of Investment
We provide various hands-on support in terms of capital and management to resolve management issues companies are faced with and work to increase corporate value by utilizing the following types of investment.
Business succession
Support for business succession/growth of owner-managed companies
Business succession which utilizes a fund brings a business owner various advantages such as the elimination of risks of diversification of controlling interests and transfer of stock at a fair price. It also brings a company which succeeds business advantages such as execution of various growth strategies supported by a fund. We support such business succession.
Spin-off
Split-up of subsidiary/department as part of business restructuring
Restructuring of a business portfolio by spinning off a group company or a business by utilizing a fund brings various advantages in addition to improvement of capital efficiency across the group such as execution of strategic investment which a target company for spin-off has not implemented. We support such spin-off.
Independence of management
Support for independence of management (MBO)
When management aims to expand businesses as an independent company, MBO through capital participation by a fund can be an effective strategy. We actively support, under a partnership with management, business expansion after independence.
Revival support
Business restructuring of poorly performing companies
When a poor performing company or a failed company is highly likely to be regenerated or such corporate group has a business producing stable cash flows, we may consider investment in such company/business as part of restructuring.
Investment Process
While we capitalize on our strengths to provide management support through an approach to investees via various channels and investment decisions based on a thorough review of businesses, we work with management of investees together to increase corporate value.
Approach to investee
In some cases, a business owner who is considering business succession, a company which is considering business transfer, or company management which is considering MBO comes to us for advice. In other cases, they ask for advice through a bank, securities firm, M&A agent, tax consultant or the management of our investee. We sometimes directly approach potential investees.
Investment decision
In addition to understanding corporate philosophy and culture through interviews with management, we work to understand the strengths of an investee such as technological capabilities and business model through research conducted in cooperation with the investee. Then, after detailed discussion with management, we formulate a medium- to long-term business plan including a growth scenario before making a final investment decision.
Management support(3 to 6 years)
Based on mutual trust between us and management of an investee, we implement various measures to increase sales and profit such as formulation of policies and action plans based on a business plan, reinforcement of required personnel who will be executive candidates in the future, development of new business segments and new customers, and improvement of productivity with help from outside consultants. As such, we support sustainable growth and improvement of corporate value of an investee to the fullest extent.
Exit
We discuss with management in advance when and how to exit, and work to understand what an investee should look like in the future. While fully respecting the intent of management, we execute stock listings or handovers to a business partner which takes into account a further growth scenario or synergy in terms of business strategy.
Investee Support
Formulation of management strategy
We acknowledge once again the market environment, redefine business portfolios at the management strategy level, and formulate and execute a medium- to long-term business plan (KPI) with management including a review of manufacturing, marketing and product/service strategy and new businesses.
Building of management structure
When required to implement a growth scenario after investment or to manage organizational governance, we assist an investee in hiring personnel who will be executive candidates not only in corporate planning/finance but in sales/manufacturing technology.
We establish a proper management structure as an independent company by measures such as institutionalization and regularization of a decision-making body such as a Board of Directors and Management Council, reinforcement of compliance and internal control, development and application of an appropriate corporate organization, and internal rules such as regulations for job authority.
In addition to revision of fundamental systems such as internal personnel affairs and compensation, we consider introducing a new incentive as required, such as granting of stock option when there is a growth scenario or a plan for stock listing.
Improvement of productivity and cost reduction
Based on cooperative relations with management and employees of an investee, we work to grow profit through projects on improvement of productivity, cost reduction and logistics reform which sometimes involve site improvement consultants.
Expansion of customers and business partners
By leveraging our extensive network at home and abroad, we support expansion of customers and business partners of our investee.
We handle matters ranging from selection of M&A candidates and development of a new channel to execution and financing. We support external growth of an investee through M&A or strategic business alliance.
Business Succession
Using a fund in business succession of an owner-management company has many advantages.
First, a business owner can eliminate the risks of diversification of controlling interests by concentration of stock with a fund as a transferee, and transfer stock at a fair price. Management which takes over the business can implement a thorough review of its internal system and measures for growth by utilizing resources and the network a fund has, in addition to joint shareholding with a fund by contributing its own financial resources.
Even when a succession is completed with only family members, funds are increasingly chosen to satisfy various needs as a business partner to support a young successor or to reinforce governance toward future listing, for instance. We have abundant experience in this area.
Regardless of the type of needs for succession, we support the formulation and execution of an optimal business strategy and work with management to increase corporate value while utilizing resources as required such as outside experts.
Comparison of fund and business company
| Business succession using a fund | Stock transfer to a business company |
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| Transferee | Buyout fund | Business company in the same industry or in peripheral industries (competitor, etc.) |
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| Independence of management | An investee formulates a management policy and a business strategy with support from a fund. | A management policy or a business strategy of a transferee (acquiring company) is often given priority. |
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| Management structure | While a fund has a controlling interest, management of an investee executes operations. | In addition to a controlling interest, business execution may be delegated when new management is dispatched from a transferee (acquiring company). |
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| Investment period | 3 to 6 years. Proper period based on the time frame of a management plan and in terms of maintaining a certain level of tension between interested parties. | No explicit investment period in principle as exit by selling stock is not assumed. |
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| Potential measures | A fund formulates an optimal business strategy for an investee. A fund can develop measures for growth by widely using an outside network that a fund has as required. |
Resources of a transferee (acquiring company) can be used preferentially (limitation of resources may hinder growth). |
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Spin-off
For an enterprise group mainly led by a listed company, restructuring of its business portfolio by so-called spin-off, separation, or split-up of a certain entity or business within the group, has various advantages.
On the one hand, a parent company can strategically develop its core business and enhance its market competitiveness by narrowing down business areas and focusing limited management resources on its core business. It can also improve capital efficiency across the group by spinning off a non-core business.
On the other hand, a target company/business for spin-off can free itself from various restrictions imposed on it as a group company and implement various measures from new perspectives as an independent company with management support from a fund. These measures include strategic investment which was low priority for a parent company, introduction of various incentives, and implementation of an efficient organizational management and decision-making process.
We support planning and execution of a growth strategy of the target company and work to increase corporate value under close cooperation with its management.
Role of spin-off in restructuring of business portfolio
| Current Theme and issues of business | After spin-off (under the control of a fund) Direction of business |
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| Parent company |
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| Target company (Group company) |
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