JIC makes LP investment in RGCM I Investment Limited Partnership

・  Utilizing direct secondary strategy to createunicorns

・   Contributingto development of the domestic secondary ecosystem

・   Attractingprivate investment funds and risk capital from institutional investors

Tokyo, April 11, 2024 – Japan Investment Corporation (“JIC”)has announced its decision to make an LP investment of JPY1.8 billion in RGCM IInvestment Limited Partnership (“RGCM I”), which is managed by Regrowth CapitalManagement Co., Ltd. (“RGCM”) and whose strategy is direct secondaryinvestment.

JIC aims to stimulate a virtuous cycle of risk capital to supportnext-generation industries in Japan. To achieve this vision, JIC promotes open innovation as a means forsupporting growth and enhancing the international competitiveness of businesses. JICapproaches these challenges by stimulating private sector investments in openinnovation together with JIC’s own investment, while fostering investmentprofessionals.

To achieve its mission, JIC invests in policy-relevant strategic businessareas through LP investments in funds under JIC’s umbrella and in privatefunds.

About LP investment in RGCM I

(1) JIC investment criteria

JIC’s investment criteria* identifies “Creating unicorn startups” as a focus area. A long-term, large-scalesupply of risk capital is required for the creation of unicorns—defined asprivately held companies with an enterprise value of USD1 billion or more—thatcan grow their business sustainably with competitive global economic strength.

*https://www.j-ic.co.jp/en/investment/criteria/

(2) Current status of investment market

In addition to the limited supply of large-scale risk capital for growthand later-stage startups, the domestic market is also expected to see anincrease in the number of domestic VC funds reaching maturity. Meanwhile, anunderdeveloped secondary market, where primary investors trade equity stakes instartups, is one of the reasons for the relatively modest scale of IPOs forstartups in Japan and a barrier to the creation of unicorns. When it comes toexits, startups have limited access to options other than IPO (i.e., M&A,etc.), and the need for secondary funds for startups that intend to grow andexpand their businesses while remaining unlisted is expected to increase.

(3) About RGCM I

Most domestic secondary funds focus on secondary investments in LPinterests as their main strategy, but RGCM I focuses on direct secondaryinvestment, especially where private investment capital is scarce. RGCM Itargets middle- to later-stage startups that are expected to IPO within thenext few years for secondary investment, and in parallel with considering theacquisition of new shares, seeks to provide a platform for startups that havebeen forced to make small-scale IPOs to push their growth curve even furtherand contribute to the creation of unicorns.

JIC expects that the LP investment in RGCM I will contribute to thecreation of unicorns originating from Japan by enhancing RGCM’s investmentactivities in middle- and later-stage startups through secondary transactions. Inaddition, the development of the secondary market in Japan will enable unlistedstartups to raise funds for further business growth and expansion, adevelopment that is expected to result in larger IPOs. In the field of deeptech, one of JIC’s priority investment areas, long-term support is necessaryfor startups to realize unicorn or greater corporate value, and the developmentof a secondary ecosystem is expected to contribute to strengthening andexpansion of the entire startup ecosystem in Japan. In addition, JIC intends toprovide RGCM1 with risk capital and support for system development, etc., inorder to attract private investment funds and promote increased fundraisingfrom institutional investors.

Overview of RGCMI

Name:                               RGCM IInvestment Limited Partnership

Established:                     2024

Duration:                          10 years (with apossible extension of 2 years)

GP:                                    RGCM1,LLP

Overview ofmanagement company

Name:                               Regrowth CapitalManagement Co., Ltd.

Established:                     2021

Address:　　　     　        Chiyoda-ku, Tokyo

Representative: 　　　　Atsushi Urushitani            

(For reference)

JIC’s fund investment strategy

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(For reference)

Objectives of JIC’s LPinvestments

1. Stimulate the supply of risk capital to helpcompanies grow and to enhance their competitiveness

JIC intends to provide capital to areas that areessential from the perspective of strengthening industrial competitiveness butlack private investment capital (investment strategies, sectors, stages,regions, etc.) with the aim of stimulating private investment capital in theshort term and medium-long term.

2. Create diverse investment teams, professionals, andstrategies to support a virtuous cycle of risk capital

1) Investmentteams

JIC promotes growth of the investee fundsas a leader in the intermediary of risk capital provided by institutionalinvestors (pension funds, foreign investors, etc.) towards the establishment offuture funds. This will be achieved by expanding experience and track recordsamong its fund investment team (management company) and by further improvingits ability to respond to institutional investors.

2) Investmentprofessionals

With the cooperation of industryorganizations such as JVCA, institutional investors, and investee managers, JICsupports the research and introduction of best practices of managers and thedevelopment of human resources serving as investment professionals.

3) Investmentstrategy

JIC will add diversity and depth to themarket by making an LP investment in funds even for those with strategies thatare not common in Japan yet, in response to their fund raising, including atthe time of its establishment.

About Japan Investment Corporation (JIC)

Japan InvestmentCorporation (“JIC”) was established on September 25, 2018 under the IndustrialCompetitiveness Enhancement Act. JIC’s investment focus areas are driving thecreation of new businesses for Society 5.0, creating "unicornstartups", leveraging promising untapped regional technologies andpromoting business consolidation across industries and organizations. JICprovides risk capital to these areas through funds independently established byJIC and LP investment in private funds to promote open innovation andcontribute to strengthening the competitiveness of Japanese industries andexpanding the investment ecosystem.