JAFCO Group Co., Ltd.

Business Details

JAFCO Group consists of a single segment, the Fund Management Business, centered on venture investment and buyout investment through funds. The company raises capital from institutional investors and corporations and invests in promising unlisted companies. Revenue comes from two main sources: management fees and performance fees from funds, and capital gains arising from the company's own equity stakes in funds. During FY2026 (ending March 2026), the company completed the transfer of its Asia and U.S. subsidiaries and is now concentrating on domestic investment. From the third quarter of the same fiscal year, the company transitioned from consolidated to non-consolidated (unconsolidated) financial statements.

Recent Overview

With only 2 IPOs and declining capital gains, operating income fell 53.5% year-on-year; annual dividend of ¥133 per share was implemented based on a 6% DOE standard

New IPOs in FY2026 (ending March 2026) totaled only 2 companies (versus 8 in the prior period), with total fund-wide IPO investment amount of ¥3,053 million and initial valuation amount of ¥6,384 million (a multiple of 2.1x), a significant decline from the prior period's 4.6x. Capital gains from domestic investments were ¥9,467 million (versus ¥10,381 million in the prior period). Following the transfer of JIAP and Icon shares, the company recorded ¥2,429 million in interest and dividend income on securities under non-operating income, and recognized ¥2,143 million in gain on sale of investment securities and ¥350 million in gain on sale of subsidiary shares under extraordinary income. The allowance for investment loss saw a provision of ¥751 million (¥1,241 million for domestic investments) exceeding a reversal of ¥2,715 million (¥1,108 million for domestic investments), causing the domestic allowance ratio to rise from 16.8% to 19.3%. The SV8 series was established in December 2025 and fundraising is ongoing, currently at approximately ¥58.0 billion. The annual dividend was ¥133 per share (payout ratio of 107.6%, DOE of 6.0%), with total dividends paid of ¥7,015 million. The company also conducted share buybacks totaling ¥4,999 million.

Key Products

Growth Drivers

• New fund formation and expansion of external investors through the JAFCO SV8 series established in December 2025 (currently approximately ¥58.0 billion in size, with fundraising continuing toward a target exceeding the SV7 series total of ¥97.8 billion)
• Realization of capital gains from exits (IPOs and M&A) within the portfolios managed under the SV4 through SV7 series (unrealized gains on listed operating investment securities: ¥16,996 million for domestic investments)
• Improved investment performance through a strategy focused on domestic venture and buyout investment (a substantial portfolio with an unlisted equity investment balance of ¥151,861 million across 215 companies)
• A high-level shareholder return policy of DOE 6% or a 50% payout ratio (with a minimum annual dividend of ¥133 or more set for FY2027 (ending March 2027) as well), along with improved capital efficiency through share buybacks
• Continued capacity for new investment supported by ample cash and cash equivalents (¥61,183 million)

Risks

• Revenue is heavily dependent on stock market and IPO market trends, resulting in significant volatility in performance (making reasonable disclosure of earnings forecasts difficult)
• New IPOs in the current period were limited to only 2 companies, with capital gains falling significantly below the prior fiscal year's level (IPO multiple of 2.1x versus 4.6x in the prior period)
• Provisions to the allowance for investment loss on domestic investments exceeded reversals, raising the allowance ratio from 16.8% to 19.3% (reflecting increased credit risk among unlisted investees)
• Unpaid capital commitments to the JIAP and Icon funds remain outstanding (including ¥4,207 million to JIF Capital Ltd. and ¥4,201 million to Icon Ventures, totaling ¥8,409 million, out of a total of ¥13,603 million)
• The transition to non-consolidated financial statements and a change in accounting treatment (from gross method to net method) have reduced comparability of financial statements, making year-on-year comparison difficult
• A loss of ¥2,073 million on fund management by other companies was recorded under non-operating expenses, indicating that gains and losses related to JIAP and Icon fund equity stakes continue to affect performance
• Potential dilution risk from convertible bond-type bonds with subscription rights to new shares (maturing 2028, face value ¥15,000 million)