Tokyo FinTech
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Tokyo FinTech

Shinsei Bank leading Impact Investing

Shinsei Corporate Investment launched the “Child-Care Support Fund” in January 2017

In 2012, Shinsei Corporate Investment (SCI) was established as the Private Equity investment arm of Shinsei Bank. After launching a few venture capital funds, the company announced their first impact investment fund, the “Child-Care Support Fund”, in January 2017. The fund was positioned as a pilot for this new investment style in Japan, with a total investment of JPY 500m (~USD 5m) from Shinsei Bank as Limited Partner and Shinsei Corporate Investment as General Partner, i.e. without any external investment money. The investment phase, originally anticipated to take three years for approximately ten investments, will be completed within only two years.

Shinsei’s impact investing approach fully aligns the the government’s objectives to develop solutions mitigating ageing population issues, challenges deriving from declining birth rates, and the associated declining population.

The fund invests in early-to-later stage companies engaging in businesses such as childcare, after-school care, education, household support, supporting families caring for both children and elders in parallel, and supporting the work-life balance of working women. As an impact investment fund, the target ROI is set at 15–25% which it deems as middle risk/middle return private equity profile, supplemented by social returns that also support the Shinsei Bank Group’s Corporate Social Responsibility (CSR) objectives.

With the initial fund expected to be fully invested one year earlier than planned, SCI is already planning the second fund, expected to launch in spring 2019. This fund will also accept external investors, including possibly government agencies. In parallel, Shinsei is building out the infrastructure that would allow for many more investments to be made, as well as for the management of multiple funds in parallel. In addition, it is expected that the second fund will not only invest into child-care businesses, but also into businesses that support an ageing population.

Investments

mama square was the first investment, announced at the same time as the launch of the fund. At the time of the investment, mama square was operating 11 locations, primarily in the Kanto region, that combined the workplaces of mothers with kids’ spaces staffed with kids-support personnel. The investment was intended to allow for the opening of additional locations.

Wisdom Academy was the second investment, announced in September 2017. Wisdom Academy has been operating 14 private after-school care centers offering enrichment lessons including English conversation and pick-up services since 2010, primarily in the Tokyo metropolitan area. The company plans to expand to 40 centers by the end of the 2020 fiscal year.

The investment in Unifa was announced in October 2017. UniFa has been offering an Internet photograph selling service exclusively for nurseries and kindergartens since July 2013, and claims over 1,800 customers in Japan. The Child-Care Support Fund participated in a capital raising round that totaled just over JPY 1bn to further develop their child caring robot and start additional offerings in healthcare IoT.

The last public investment to date was announced in April 2018 into COMPASS, creators of the Qubena AI-driven, tablet-based learning system, with 15,000 users across Japan. The funds raised are intended to support the development of additional customized contents for different tutoring schools.

Lastly, the fund stated that a non-public investment has been made in September 2018 into an EdTech/HR Tech enterprise.

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Norbert Gehrke

Norbert Gehrke

Passionate about strategy & innovation across Asia. At home in Japan. Connector of people & ideas.

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