ICG and Committed Advisors back Japanese quasi spin-out – exclusive

The secondaries firms backed a deal that moved Orix Capital Partners' portfolio into a new vehicle, allowing new investors.

ICG and Committed Advisors have backed a process that will partially free the captive private equity arm of a Japanese conglomerate, Secondaries Investor has learned.

The secondaries firms acquired 40 percent of the portfolio of Orix Capital Partners, according to a source familiar with the deal. The portfolio, which was originally acquired using the balance sheet of parent Orix Corporation, has been placed in a new vehicle backed by ICG, Committed Advisors and the parent.

The structure will help Orix Capital Partners diversify its investor base, Secondaries Investor understands. The firm will invest alongside ICG and Committed Partners with the eventual goal of raising third-party capital.

ICG and Committed Advisors paid around $120 million in total for their share. ICG accounted for a majority of the investment and Orix Corporation maintains operational control. The deal closed in May.

The portfolio comprises two US-located infrastructure services companies: traffic control and pavement marking company RoadSafe and underground water infrastructure maintenance firm Hoffman Southwest Corporation.

Terry Suzuki, president and chief executive of Orix Capital Partners, told sister publication Private Equity International in August about its plans to raise third-party capital as soon as this year.

“Orixis still rather new to the US investor community… So we’d like to demonstrate our performance first,” he said.

The deal is similar to another recently backed by ICG in conjunction with Goldman Sachs Asset Management: the $325 million spin-out of Aretex from Chinese holding company ZZ Capital.

ICG invested in both deals through its strategic equity unit. It is in market seeking $1.6 billion for its latest dedicated secondaries fund, Secondaries Investor revealed in April. Committed Advisors is investing its €1.03 billion third dedicated secondaries fund, which closed in April last year.

Orix Capital Partners makes investments of between $75 million and $200 million in infrastructure services, industrials and business services segments, according to its website.

Its president and chief executive is Terry Suzuki, a former partner at KPMG in the US and co-chief executive of Cerberus Japan, according to his LinkedIn profile.

Founded in 1964 Orix Corporation invests in businesses, aircraft, insurance policies, renewable energy infrastructure and vehicles, among other asset types. It has around $88 billion in assets under management, according to its 2017 annual results.

ICG declined to comment. Orix Capital Partners and Committed Advisors did not return requests for comment.