Cool Japan Led by Ex-Carlyle Manager Promotes Sushi to J-Pop

From sushi and ramen noodles to manga comics and pop music, Japan is promoting products it deems cool through a state-backed fund led by a former Carlyle Group LP manager.

Cool Japan Fund Inc., which was formed last week with 57.5 billion yen ($560 million), is considering buying television channels and investing in retail property abroad to showcase the nation’s cuisine, fashion and animation, Chief Investment Officer Koichiro Yoshizaki said in an interview on Nov. 28.

Mizuho Financial Group Inc., Lixil Group Corp. and Dentsu Inc. are among 15 Japanese companies that invested 7.5 billion yen in the fund. The remaining 50 billion yen is from the government, as Prime Minister Shinzo Abe tries to nurture growth of the nation’s creative industries by expanding them abroad as the domestic market shrinks.

“Unlike typical private-equity firms seeking returns over a short period, we’re going to invest in companies over the long term in the areas of food, fashion and media content,” said Yoshizaki, 47. “We’ll aggressively search for investment targets.”

The fund is seeking TV channels in markets including the U.S. to broadcast Japanese drama shows, cartoons and movies, said Yoshizaki, who previously worked at Carlyle’s Tokyo office, where he oversaw investments in small and midsized companies in Asia. It may invest in projects to build Japan-oriented shopping streets in regions including Southeast Asia, he said.

Double Assets

Cool Japan aims to almost double assets to 100 billion yen in two years, with both government and private contributions, said Yoshizaki. It plans to triple investment staff to 30 by the end of March and make its first deal in the first half of 2014, he said.

Cool Japan doesn’t have specific targets for its investment returns, Yoshizaki said. Investors including banks and companies from various industries can benefit by obtaining business in countries and areas where the money will be invested, he said.

Abe plans to triple overseas sales of Japanese broadcast content by 2018 from the current 6.3 billion yen, according to the government’s economic growth strategy released in June.

The fund will seek to promote Japanese foods, including “washoku,” a traditional cuisine that is poised to be added to the United Nations Educational, Scientific and Cultural Organization’s intangible cultural heritage list. A Unesco panel made the recommendation following an application by the Japanese government, the country’s Agency for Cultural Affairs said in a statement on Oct. 22.

Food Attraction

“Fancy washoku cuisine is becoming more popular in big cities like New York and Paris, and Japanese-style fast food is also attracting people around the world,” Yoshizaki said.

Cool Japan isn’t the only public-private fund aimed at combating the country’s aging and shrinking population by tapping demand from abroad. The government formed Innovation Network Corp. of Japan, known as INCJ, in July 2009 to invest in companies developing technologies that would help the nation’s industries compete with global peers.

INCJ has 280 billion yen of funds from the government and companies, and has the capacity to invest as much as 2 trillion yen, according to materials on its website. Its Chief Operating Officer Haruyasu Asakura worked at Carlyle with Yoshizaki.

Investments by INCJ include a 150 billion yen deal with local partners in 2012 to buy Renesas Electronics Corp., an ailing Japanese chipmaker, and a 2011 purchase of a stake in Peach Aviation Ltd., a low-fare carrier. INCJ doesn’t provide returns on its investment.

“What’s surprising is that Japan has so many cool things,” Economy Minister Akira Amari said at Cool Japan’s opening reception in Tokyo on Nov. 25. “What’s even more surprising is the country doesn’t acknowledge enough that it has such coolness that attracts people abroad.”

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