I NTE GRAT E D
RE PO RT

2022

PURPOSE

IDENTITY

Fueling perpetual growth;
investing in bold visions

Co-Founder

As a venture capital pioneer in Japan, JAFCO Group has led the way in opening up the market

JAFCO Group has always worked side by side with cutting-edge entrepreneurs. In addition towhile overcoming many challenges. In our early years, we encountered difficulties establishinga large number of investment professionals with broad experience, we have accumulated thea consistent revenue base. However, the 1980s marked a turning point when we establishednecessary resources and built extensive networks to foster the growth of portfolio companies.

Japan’s first venture capital partnership fund and pursued continued expansion of our businessas a venture capital firm. Having secured a stable source of capital for investment, we haveAn essential part of going beyond simply being an investor—to truly commit to achieving

been pursuing a uniquely Japanese approach as an investment firm specializing in private

business growth and increasing corporate value by working together with entrepreneurs andequity while working to recruit and train personnel with a long-term perspective.

management teams—is for each of our investment professionals to make a deep commitment tomanagement as a “Co-Founder” from the conceptual stage of businesses. In our venture

Over the years, the Japanese economy has grown, developed, and matured, and during thatinvestments, we work alongside entrepreneurs as a Co-Founder of nascent startups, and in ourtime, JAFCO has consistently invested in bold visions. Our business has two main pillars. In

buyout investments, we vigorously promote business growth as a Co-Founder of companies

venture investments, we pursue the creation of new businesses together with entrepreneurs. In

embarking on a “second start.”

buyout investments, we guide companies that seek renewed growth through a “second start,”
enabling them to achieve enduring growth and expansion. We have invested growth capital in

Furthermore, the corporate culture we have created motivates not only our investment

unlisted companies through fundraising and equity financing to support growth and to provide

professionals but all of our employees to do their best to ensure the growth and development ofreturns to investors through IPOs. Moreover, a stable supply of risk money will be required toportfolio companies. The mentality, knowledge, and experience passed down for decades

revive the now stagnating Japanese economy and put it back on track for growth. We arehave been developed based on the mindset of a Co-Founder, which creates a cycle of growthcommitted to maintaining and expanding the investment cycle, no matter how difficult theand provides the energy to achieve Our Purpose.

operating environment becomes, to fuel perpetual growth.
Simply maintaining the status quo is unacceptable in the mindset or behavior of a Co-Founder.
The problems facing the global environment and economy are more complex than ever before.

The attributes needed of a Co-Founder develop as each individual gains experience in thinking

Humanity must create a new form of prosperity in which everyone can coexist in harmony,autonomously and taking decisive action. In becoming an organization where each individual

regardless of race, gender, or culture. Since our founding, we have worked with various

plays an active role as a Co-Founder, we will continue to take on challenges with entrepreneurs

entrepreneurs to create and further develop innovative products and services that the world

and provide higher value to portfolio companies and society.

needs and ushered in a new era. By boldly investing in initiatives that create as-yet-unknown
value and committing to growth, we will fuel perpetual new growth and contribute to therealization of a sustainable society.

1

JAFCO INTEGRATED REPORT 2022

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2

JAFCO Group’s
ValuesApplying Our Purpose: JAFCO Group’s History

JAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

By continually challenging ourselves as a pioneer in private equity investment in Japan,
we have developed an investment style that delivers stable results and contributed to the growth of a sustainable society.
JAFCO Group’s Initiatives
LaunchBusiness expansion

1973–1981

1982–1992

Dawn of venture capital in Japan
Raised funds from more than 100 financial
institutions in Japan and overseas andenhanced revenue base by expanding financing
operations in addition to investment operations

1981 Started new graduate recruitment

1993–1997

Steadily expanded fundraising after establishing
Japan’s first venture capital fundSlump indomestic investment

Achieved high performance backed by
Japan’s economic growth

Began full-scale
investment in Asia,
the United States,
and Europe

Launched overseas investment activities

1973 Japan Associated Finance Co., Ltd. was established1982 Established Japan’s first venture capital fund, JAFCO No. 1
Investment Enterprise Partnership

Withdrew from financing
operations and expanded
private equity investment
Continued to achieve high performancein Japan and overseas boosted
by the dot-com bubble

1997 Changed
company name to
JAFCO Co., Ltd.

1986 Established JAFCO Investment Inc. as first business base in Asia
1987 Registered as over-the-counter (OTC) stock with Japan Securities
Dealers Association
Annual investment amount (left)

70

Full-line investment

Highly selective, intensive investment

2003–20092010–Present

Following the collapse of the dot-com
bubble, focused on increasing sharein the domestic IPO market andon expanding fund size throughinvestments covering a wide range
of industries and stages

Focused on achieving performance independent of market
conditions by investing in companies with high potential
and acquiring influential stakes to raise their corporate value

1998–2002

1997 Established Japan’s
first industry–
academia fund1984 Established U.S. subsidiary JAFCO America Ventures Inc.

(¥ billion)

Concentration on
venture capital andprivate equity investment

Post-bubble
economyShifted focus towardearly-stage IT investment
1998 Established specialized
division for buyout investment

2007 Registered as financial instruments
business operator

TOPIX

2015 Transitioned to company with a board-audit committee

2000 Established specialized
division for adding value
to portfolio companies

2017 Bought back and canceled all shares (27.8%) heldby Nomura Holdings, Inc. and Nomura Research Institute, Ltd.

2001 Listed on First Section ofTokyo Stock Exchange (TSE)2020 Changed company name to JAFCO Group Co., Ltd.

2018 Introduced partnership model to business structure2022 Transferred to TSE Prime Market

2001 Established specialized
division for investment inuniversity-originated startups

Cumulative funds under management (right)

2010 Shifted fully toward highly selective, intensive investment(¥ billion)
1,400

60

1,140.8 1,200

50

1,000

37.1

40

800

30

600

20

400

10

200

0

0
1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

1976

1985

1989

1994

1999

2007

2011

2016

2020

Japan OTC Securities Co., Ltd.
established

Rapid appreciation of
yen due to Plaza Accord

Nikkei Stock Averagereached all-time highRegulations eased forplacement of venture capital
directors and officers

Act on Supporting Business
Innovation of Small andMedium-sized Enterprises
entered force

Financial Instruments andExchange Act entered force

Great East Japan Earthquake

Bank of Japan introduced
negative interest rate policy

COVID-19 pandemic
spread globally

TSE Mothers Market established

1973

1983

1987

1991

1997

1998

2001

First oil crisis

New OTC market opened

Black Monday

End of Japan’s bubble economy

Asian financial crisis

Limited Partnership Act
for Investment enacted

Dot-com bubble collapses

String of bankruptcies
among financial
institutions

3

JAFCO INTEGRATED REPORT 2022

2008

2012

Global financial crisis

Inauguration of second Abeadministration (start of “Abenomics”)

JAFCO INTEGRATED REPORT 2022

4

JAFCO Group’s
ValuesApplying Our Purpose: JAFCO Group’s Strengths

JAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

PurposeFueling perpetual growth; investing in bold visions

Investment Management Capabilities

Fundraising Capabilities

Our investment management capabilities stem from our strong

While the success or failure of fundraising is significantly

deal-sourcing skills, the ability of our investment professionals toaffected by the economic environment and performance, we

contribute to the growth of portfolio companies, and ourraise capital for large flagship funds every three years to secureorganizational ability to share, gather, and complement theinvestment capital. As the management of private equity

experience of individuals—all of which have been continuallyinvestment requires a higher than usual level of discipline andpassed down as part of our corporate culture. Leveraging thesetransparency, we have enhanced our regular reporting andstrengths, we conduct investment activities based on our policy

established a high level of trust with investors through supportof highly selective, intensive investment. Having carefully

tailored to their individual needs. We will continue to hone ourselected investment targets from among many candidate

fundraising capabilities to increase our ability to provide risk

companies, we acquire an influential stake and then intensively

money. Moreover, while deepening relationships with existing

provide management resources to boost corporate value. Amid

investors, we will also expand the scope of our activities tosigniﬁcant changes in the business environment, we will further

attract new ones.

develop this policy and thereby enhance our ability toreproduce successes.

Organizational Foundation
We have firmly established a unique model for recruiting and training new graduates to become investment professionals, as well as a culture in which experienced seniorpersonnel pass on their knowledge and mindset to younger team members. We are also bolstering mid-career recruitment of specialists, which has allowed us to expand ourinvestment domain and the scope of our involvement in the management of portfolio companies. We differentiate ourselves from other general venture capital and private equity
fund management companies, in having not only a dedicated fundraising division but also a back-office team well versed in private equity investment and fund management, as
well as sophisticated compliance and risk management systems. This organizational framework ensures that we continue to reproduce performance.

We fuel perpetual growth by harnessing the value derived from our investment management capabilities,
fundraising capabilities, and underlying organizational foundation.

5

JAFCO INTEGRATED REPORT 2022

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6

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Contents

JAFCO Group’s Business Overview

JAFCO Group’s Values
1 JAFCO Group’s Purpose / Identity
3 Applying Our Purpose: JAFCO Group’s History
5 Applying Our Purpose: JAFCO Group’s Strengths

Total Funds under Management

JAFCO Group’s Profit Structure
The Company conducts venture and buyout investment through fund management. Our main income sources are management fees and success fees
derived from fund operations and capital gains on direct investment in funds. The fund term is 10 years in principle, with a possible extension of two years.
The portfolio of a newly established fund is built over a period of about three years following the start of fund operation. We believe that continuallysourcing and investing in promising companies based on our policy of highly selective, intensive investment ensures stable investment performance,
regardless of the timing of a company’s establishment or business sentiment. After investment, we deepen management involvement and raise corporate
value with entrepreneurs to achieve exits (sales) through IPOs, M&A, and other means.

¥ 332.3 billion

Total capital commitments
Amount subject to management fees

¥ 138.9 billion

JAFCO Group’s Value Creation
9 Message from the President
15 Value Creation Process
17 Sources of Value Creation
19 Materiality(¥ billion)

21 Sustainability
433.9

Investors

JAFCO Group and Partners

7 JAFCO Group’s Business Overview

348.5

23 Message from the CFO

451.5

27 Business Process

359.1

332.3

(Financial institutions, business firms, etc.)

Sustainable Growth Strategy
29 Venture Investment
31 Buyout Investment
33 Portfolio Company Case Studies

Success fees
Management
feesManagement
operation

Capitalcontribution

Distribution of
investment returns

Capitalcommitments

35 Business Development

Distribution of
investment returns

37 Fund Management

Funds
Investment

75.7
Capital gains

2018/3

Unlisted companies

129.0

75.5

2019/3

Total capital commitments

2020/3132.0

2021/3138.9

39 Global Investment

2022/3Business Foundation for Sustainable Growth

Amount subject to management fees

Notes: 1. Excluding JAFCO Group’s interest in funds, Icon funds, and funds under extension.
2. Foreign-currency-denominated funds are calculated based on the exchange rate at theend of each fiscal year.

41 Human Resources Strategy
43 Message from an Independent Director
45 Board of Directors
47 Corporate Governance
52 Compliance
53 Risk Management

Net Sales / Operating Income / Profit Attributable
to JAFCO Group Co., Ltd. Stockholders

56 Environmental Initiatives

Domestic IPOs

Fund Management Fees / Success Fees(including funds under management)

Net sales¥ 27.7 billion

First price-based capital gains¥ 38.4 billion

Fund management fees

¥ 2.9 billion

Operating income¥ 16.9 billion

Number of IPOs

4 companies

Success fees

¥ 4.5 billion

Profit attributable to
JAFCO Group Co., Ltd. stockholders¥ 15.1 billion(¥ billion)

24.2

14.3

12.2
10.2

63 11-Year Summary
65 Changes in Fund Performance

70 Shareholder/Investor Information(¥ billion)

38.4

7

21.5
15.0
11.8

(Companies)

27.7

25.9

61 Financial and Non-Financial Highlights

69 Company Information

7.4

32.8

29.9

29.5

57 Review and Analysis of
the Fiscal Year Ended March 31, 2022

67 ESG Data(¥ billion)

38.5

Corporate Data

21.3

4.9
3.6

6.2

2.5

business model that supports value creation, and our future growth direction. Seeking to further
communication with all of our stakeholders including shareholders/investors, our fund investors,
portfolio companies, and employees. In editing this report, we referenced the International
Integrated Reporting Framework of the IFRS Foundation and the Guidance for Collaborative Value
Creation released by the Ministry of Economy, Trade and Industry, and other resources.

0.8

12.1

shareholders and investors understand the social value that JAFCO Group has created to date, ourenhance our corporate value through dialogue, we have positioned this report as a means of

2.5

2.6

2

9.0

announcing our growth strategy and capital policy. We have published this report to help our

4.5

2.4

3

took the first step toward even greater growth by establishing our new purpose statement and

5.3

4

16.9
15.1

to the revitalization of industries through venture and buyout investment. In December 2022, we

6.2

5Editorial Policy
JAFCO Group has supported the launch and rejuvenation of numerous companies and contributed

2.6

1.8

2.9

2.9

Scope of Report
Scope: JAFCO Group Co., Ltd. and its group companies (consolidated subsidiaries)
Reporting period: From April 1, 2021 to March 31, 2022

2018/3

2019/32020/32021/32022/3

Net sales
Operating income
Profit attributable to JAFCO Group Co., Ltd. stockholders
Note: A gain on sale of investment securities was recorded as an extraordinary gain in the fiscal
year ended March 31, 2018, and the fiscal year ended March 31, 2021.
Notes to graphs on pages 7–8:
1. Figures are rounded to the nearest unit.
2. The U.S. subsidiary is excluded from the scope of consolidation from the fiscal year ended March 31, 2019.

7

JAFCO INTEGRATED REPORT 2022

2018/3

2019/3First price-based capital gains

2020/3
Number of IPOs

2021/32022/3

2018/3

2019/3Fund management fees

2020/32021/32022/3

Success fees

Note: Figures reflect the exclusion of the U.S subsidiary (JAV) from the scope of consolidation.

Note: Some information is based on activities that took place before or after this reporting period.

Note Concerning the Future Outlook
Information in this report relating to current plans, the future outlook, and strategies, etc., hasbeen determined based on the information available at the time the report was prepared. Please
be aware that various factors may cause actual future results to differ signiﬁcantly from theoutlook. Risks and variables that may affect results include macroeconomic trends surrounding theCompany’s business environment, market competition, exchange rates, taxation systems andother various regulations/systems, and internal and external factors.

JAFCO INTEGRATED REPORT 2022

8

JAFCO Group’s
ValuesMessage from the President

Fueling Perpetual
Growth by Continuing
to Support People
and Companies
Pursuing Change
Keisuke Miyoshi
President & CEO

Growing Presence of Startups and Increasing Business Opportunities

JAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

JAFCO Group’s Ongoing Business and Social Value

The Company formed Japan’s first venture capital fund (investment

the transformation and restructuring of society through their solid

partnership) in 1982. Since then, we have worked closely withbusiness development. It is essential that we believe in the newcompanies to achieve growth and revitalize their businesses throughchallenges undertaken by portfolio companies/entrepreneurs and thinkventure and buyout investments.

through how to achieve them together. Occasionally, there are cases

We place importance on continually investing in the bold visions of

where the interests of stakeholders may not coincide, but we believe that

entrepreneurs and others. What we value most in investment activities

we always make fair decisions on such matters (an important value).

is our approach of growing together with portfolio companies. For this

Our investments often involve pursuing pioneering goals such as thereason, it is essential that we gain the understanding, trust, andcreation of novel business models, so naturally, we must be prepared

cooperation of the four groups of stakeholders involved in our growth—

for a certain degree of failure. However, we have learned from

namely, portfolio companies/entrepreneurs, fund investors, shareholders/experience that big results only come from continuing to take on

investors, and our employees. By doing so, we are able to promotechallenges without fear of failure. This is behind our firmly rooted

joint operations with portfolio companies over the medium to long term.

culture of not fearing but permitting failure.

Venture investments come with high risk and require a significant amount

Our investments are not possible without portfolio companies/of time because they essentially involve the creation of completely new

entrepreneurs that are serious about growing their businesses, ourbusinesses from the ground up. To guide these investments to success,employees who promote the businesses with them, our fund investors

it is important to listen carefully to the opinions of not only portfolio

who provide capital, and our own shareholders/stock investors.

companies/entrepreneurs, but also fund investors, shareholders/stock

We work alongside portfolio companies/entrepreneurs to put theirinvestors, and our investment professionals and other employees.

businesses on track for growth, and distribute the proceeds that we

A key point for realizing the world envisioned by portfolio

gain from our investments in the form of returns to fund investors,

companies/entrepreneurs is to jointly think through what kind of

shareholders/investors, and the Company. By repeating this cycle ofbusiness to create and how it will contribute to the transformation andmaking an investment, achieving the portfolio company’s growth, andrestructuring of society. In buyout investments, our aim is to take over arecovering the investment, we have challenged ourselves to create new

business, further enhance its value, and then transfer the business to takevalue, led many companies to success, and achieved our own growth.

it to the next stage. Our approach with buyout investments is the same

Our social value is in our ability to promote corporate rejuvenation andas the one with venture investments in that we listen carefully to all

eventually change the industrial structure through our investments.

stakeholders in the process of management reform and contribute to
Uncertainty about the future of society continues to grow.
The COVID-19 pandemic has brought significant changes to our

9become commonplace for major corporations and other establishedcompanies to find ways of effectively incorporating these products andlifestyles and behavior patterns, while the crisis in Ukraine has led toservices into their own businesses. While the majority of existingsoaring prices and supply shortages worldwide. At the same time,companies have started taking social responsibility seriously

environmental and social changes, including intensifying disasters

recognizing that resolving social issues is a fundamental theme, there

arising from climate change and the emergence of human rights andhas not necessarily been a seat at the table for startups to play theirother social issues, are heavily impacting people’s ways of life, as wellpart. However, as social change accelerates, there are growing

as corporate management and supply chains.

expectations for highly agile startups, and venture investments are now

Increasing the Reproducibility in the Challenge to Succeed

Our journey to date has not always been smooth. Despite many

was aimed at promoting the growth of portfolio companies by

The COVID-19 pandemic has undeniably forced companies tomade across a broader range of themes and in greater amounts. At

difficulties, including the collapse of the dot-com bubble in 2001,

acquiring an influential stake that allows deep involvement in theirchange traditional ways of generating earnings and working, which

the same time, there is steadily increasing social demand with regard

the global financial crisis in 2008, and the Great East Japan

management. At a time when it was widely taken for granted thathas made it difficult to derive solutions from past success models. Amid

to the venture and buyout investments that we engage in. This includes

Earthquake in 2011, we have steadily continued to invest in the boldinvestments in startups would usually fail and the standard practicethe need to pursue the development of novel products, services, andthe rise in the number of successful companies that have taken thevisions of entrepreneurs and others. I consider our biggest turning

was to diversify investments in many startups in a broad range oftechnologies based on totally new approaches, startups are attracting

current social changes as opportunities, and growing needs for support

point to be when we shifted our investment policy to highly selective,

business categories, we resolved to focus instead on highly selective,

more attention than ever before. The products and services created byin establishing independence from the parent company and forintensive investment in 2010. This approach focuses on high-potential

intensive investment, concentrating our funds in companies thatstartups are closely attuned to changes in the market, and so it has

business succession.

targets and takes on the risk of making bold investments. The shift

showed a particular promise.

JAFCO INTEGRATED REPORT 2022

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10

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Ltd. (NRI), which amounted to 27.8% of the total shares outstanding,

When it comes to putting this into practice, investment professionals
who are able to think through the creation of new businesses together

and became totally independent. Up to that point, we had already beenwith portfolio companies/entrepreneurs are indispensable. However, I

independent in terms of management and business operations, but webelieve that the very reason why our highly selective, intensive investment

still had a capital relationship with them. By dissolving this relationship,

has been successful and produced steady results is that we have built a

we clarified our stance as an independent company. In conjunction withsystem where our highly ambitious investment professionals can support

the major shift in the shareholder composition, we have been working toa portfolio company’s growth and create/innovate businesses along

enhance governance to ensure that our management fully considers thewith our Business Development Division, Fund Management Division,interests of both our shareholders, mostly consisting of institutionaland Administration Division.

investors, and our fund investors.

Meanwhile, in July 2017, we bought back and canceled all of ourshares held by Nomura Holdings, Inc. and Nomura Research Institute,History of Strengthening Corporate Governanceand Commencement of Full-Fledged Sustainability Management

Since becoming a company with a board-audit committee in June

Remuneration Committee (in June 2019), and other measures.

2015, we have accelerated the strengthening of corporate

Furthermore, in the fiscal year ended March 31, 2021, wegovernance by increasing the ratio of independent directors,

decided, from the standpoint of capital efficiency, on a policy toappointing a female director, establishing the Nomination andclearly specify the amount of funds needed for continuing investment

PurposeFueling perpetual growth;
investing in bold visions
MissionCommit to new business creationand jointly shape the future

11

JAFCO INTEGRATED REPORT 2022

activities and to return the surplus to shareholders. We bought backvalues we embrace) to our employees, investors, and othershares totaling ¥35 billion that year and a further ¥15 billion thestakeholders, we set out to introduce a purpose statement. After

following year and we have sold about 40% of our NRI shareholdings

repeated discussions from various angles, we identified Our Purpose toaccording to our announced policy.

be “Fueling perpetual growth; investing in bold visions.” While

We have also worked on establishing a sustainability management

upholding our Mission “Commit to new business creation and jointly

structure. In the fiscal year ended March 31, 2022, we launched ashape the future,” which defines the aspiration we have pursued sincesustainability project and began discussions on how to achieve

our foundation, we will decisively invest in bold visions that generatecontinuous improvement of corporate value. Under this project, we arenovel value, commit to ensuring their ability to fuel new perpetual

working on building corporate and governance structures that are

growth, and contribute to the realization of a sustainable society. We

resilient to global demands by highlighting any gaps between ouralso identified the material issues that we face in realizing Our Purpose

management and external requirements. We also launched a cross-and discussed measures to improve our corporate value. Regarding

divisional project to discuss measures to enhance our corporate value,

our human resource policies, we have launched a number of newincorporating the details discussed in the sustainability project.

initiatives, including more active mid-career recruitment, training ofIn addition, in order to communicate the significance of ourinvestment professionals, diversity initiatives, and the introduction ofexistence as a company (i.e., the social value we create and the

new workstyles amid the COVID-19 pandemic.

Results for the Fiscal Year Ended March 31, 2022

Our highly selective, intensive investment to date has borne fruit, and ina portfolio company of ours. I believe that this success was a result of

the fiscal year ended March 31, 2022, our fund management

the efforts of our team led by investment professionals in supporting theachieved a significant result in the form of the IPO by Visional, Inc.,

entrepreneur’s desire to create a new mechanism to resolve social

JAFCO INTEGRATED REPORT 2022

12

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

CorporateData

the case of Visional by accumulating our own know-how out ofremaining shares of NRI held will be sold, and the proceeds from thatpass on knowledge and experience to them, and also recruit diverse

successes of this kind.

sale will be used to buy back our shares, which will then be promptly

human resources with the necessary backgrounds to help portfolio

Moreover, in buyout investments, our ongoing efforts to provide

canceled. In addition, we have changed the dividend policy fromcompanies grow their business. We will also enhance our specialized

our investment in Visional is that if a company can create a new

attentive support from investment to exit have resulted in the launch of apaying 3% of shareholders’ equity to paying the greater of 3% offunctions aimed at providing cross-sectional support to portfolio

business model by successfully addressing changes in social values inbuyout-dedicated fund. In addition, we completed investment activity

shareholders’ equity or 50% of net income.

issues using IT and solve challenges in the way people work in Japanby focusing on the area of workstyles, rather than simply leveraging
outstanding technologies or services. One insight we gained throughJapan, it will be able to gain a large share of an existing massive

for the SV6 venture capital fund, and now we have begun fundraisingmarket and win a high reputation on a global basis. We will try to

for the next SV7 fund.

Our medium-to-long-term goals are to reduce our investment ratio in
new funds from 40% to 20%, to increase total funds undermanagement (AUM) from ¥380 billion (as of September 30, 2022) tofirmly root knowledge for the next success in our teams and replicate¥670 billion, and to boost ROE from 6% to the range of 15–20%.
As part of our growth strategies, we need to enhance our investmentcompanies such as hiring executives and employees andstrengthening their relationships with established large corporations andfinancial institutions.
Furthermore, as a measure to actively contribute to the realization ofa sustainable society through our investment activities, we will
strengthen investment in businesses that contribute to sustainability, andmanagement and fundraising capabilities, and strengthen ourhelp portfolio companies enhance their corporate governance. Manyorganizational foundation which supports our investment activities.

of our investment activities lead to the creation of new businesses that

We will raise our investment management capabilities by improving

resolve social issues. To date, we have contributed to social

our approach of highly selective, intensive investment, which we havesustainability through the expansion of portfolio company businesses.

been promoting since 2010, and deepening our involvement in the

Against the backdrop of the growing awareness of social issues, weand announced the Basic Policy for Enhancing Corporate Value inmanagement of portfolio companies by quickly identifying businesswill further increase investment in businesses and companies pursuing

to enhance corporate value, some shareholders proposed a measure

November 2022. The key points of the policy are to aim for greater

possibilities in each stage of investment, growth, and exit. Being

solutions to social issues. For unlisted companies, implementing

to enhance shareholder value in August 2022. Given our priorcapital efficiency than ever before, and to explicitly state andcommitted to broader and deeper growth, we can eventually maximize

ESG-conscious management at an early stage will lead to stable andrecognition of and ongoing discussions on matters overlapping with

implement our growth strategies. In the short term, the amount of

the value of, and guide each portfolio company through to exit.

sustainable corporate/business growth. As lead investor, we regularlymuch of the proposal content as issues to be addressed, we specified

capital earmarked for the Company’s investment business will be

To expand our fundraising capabilities, while increasing thecheck the governance structure of portfolio companies and help themour future direction, taking into account the content of the proposal,

halved from ¥120 billion to ¥60 billion. At the same time, allpercentage of repeated investments from existing fund investors, we

improve it by engaging in dialogue with their management team.

Our Determination to Make Further Progress

As the Board of Directors and other bodies were discussing initiatives

will acquire new investors especially by targeting a new group of

Through these activities, we will achieve Our Purpose of “Fuelinginvestors who put a particular premium on the social and economic

perpetual growth; investing in bold visions” by maximizing the supply

value of funds. As a measure to strengthen the organizationalof risk money and circulating such money to guide portfolio companies

foundation of employees, we will continually hire new graduates andto growth, thereby contributing to sustainable economic growth.

Becoming a Partner of People and Companies Pursuing Change and Innovation

Today, the world, in particular Japanese society, is undergoing a majorannounced Basic Policy for Enhancing Corporate Value and making

paradigm shift, away from the traditional social structure, and this trend

significant changes ourselves, we will together take up the challenge ofis expected to accelerate. We have invested, and will invest in peoplebuilding a sustainable society.

and companies taking on challenges to pursue change and innovation.
Toward that end, we must become their partner of first choice. We,

Stay tuned as we strive to become a partner of people andcompanies pursuing change and innovation.

too, will constantly change. By steadily implementing the recently

13

JAFCO INTEGRATED REPORT 2022

JAFCO INTEGRATED REPORT 2022

14

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Value Creation Process

Fueling perpetual growth; investing in bold visions
We will continue to invest in the bold visions of entrepreneurs and companies to drive the rejuvenation of industries and achieve the sustainable growth of society.

PurposeFueling perpetual growth; investing in bold visions

MissionCommit to new business creation and jointly shape the future

InputsProcess

Outputs

Outcomes

Climate change and the decarbonized society

Human capital
Stable supply of energy and foodBusiness process"p.27–28

JAFCO’s unique investment professional
training model

new graduate hires and4,100

mid-career professionals
Organizational investment structure

Poverty and income inequality

supporting strong individuals

Support for enhancing corporate value

Investments

Portfolio company sourcing/support"p.17–18

Capital gains

Total funds undermanagement

Work and lifestyle changes

Materiality

Intellectual capital

External
environment
surrounding
JAFCO Group

Track record of success and failure(Total commitments)

in private equity investments

Funds

Fund formation/management expertise

Financial indicators

Fund management
fees, success fees

Extensive knowledge based on an
unparalleled track record of IPO support

Lack of successors at small- andmedium-sized enterprises

Social andrelationship capital
Extensive relationships of trustwith entrepreneurs
Strong partnerships with fund investors

Development of a digital society

Expectations for the creation of innovation

15

JAFCO INTEGRATED REPORT 2022

Information
disclosure,dividends¥ 27.7 billion
Fundraising,information provision

Shareholders/
Stock investors

Capitalcommitments

Distribution

Expansion ofrisk money
supplyExpansion of
employment

Economic
growthOperating income¥16.9 billion
Fund
investors

Profit attributable to
JAFCO Group Co., Ltd.
stockholders

Expanding network¥15.1 billion

with large companies, etc.

"p.18

Creation/development of
new businesses

Net sales"p.17

Stagnation of the Japanese economy

Low birthrate and the dramatically aging society

Promotion of rejuvenationof industries¥ 332.3 billion

Fund management,
capital commitments

cultivated over the years"p.19–20

Investment inbold visions

Portfolio companies

Hybrid organization combining

Heightened awareness of respectfor human rights

Cumulative
number of portfolio
companies

Corporate governance"p.47–51

Note: All figures are for the fiscal year
ended March 31, 2022.

Expansion of
the ecosystem forsustainable growth

JAFCO INTEGRATED REPORT 2022

16

JAFCO Group’s
Value Creation

JAFCO Group’s
ValuesSustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Sources of Value Creation

Integration of Management Capital based on Human Capital
JAFCO Group creates new value by integrating its unmatched intellectual capital and social and relationship capital based on the organizational and human resource capabilities that it has cultivated.

Intellectual capital

Because investment in unlisted companies that may not have a solid business foundation is highly

Our shareholders, fund investors, and portfolio companies are all important stakeholders. The successuncertain, the key is how effectively past experience can be leveraged to reproduce success.

of portfolio companies improves fund performance, which translates into profits for fund investors andReproducing success fuels perpetual growth. We have established a mechanism for sharing andshareholders. The relationship between the Company, portfolio companies, and limited partners is that

accumulating experience through meetings and information systems throughout all business processes,of a partnership for the growth of portfolio companies. Fund investors not only provide funds but also

which range from forming funds, identifying investment targets, making investment decisions, executing

actively collaborate with portfolio companies. We, too, are sometimes introduced to promisingplans, and enhancing corporate value to selecting an exit.* This mechanism is our intellectual capital.

companies and entrepreneurs by portfolio companies.

Social andrelationship capital

Our network with large companies and related institutions is also essential for expanding businessTo date, we have invested in 4,100 companies and supported more than 1,000 IPOs. One of ourstrengths is the ability to identify the potential issues that could be faced by portfolio companies andand fundraising opportunities for the growth of portfolio companies. We continue to expand ourprovide solutions based on our experiences of success and failure that have been accumulated in the

network and deepen trust through various activities, including workshops and seminars.

process of supporting an overwhelming number of IPOs.
* Refers to recovery of invested funds or exit strategies in venture capital and other investment funds

Fund formation andExtensive knowledge based onfund management expertisean unparalleled track record

cultivated over the yearsof IPO support

Cumulative number

Cumulative fundsof portfolio companies

under management

1,140.8 billion

Track record of success and failure
in private equity investment

4,100

¥

Extensive relationships of trust

Strong partnerships

Expanding networkwith entrepreneurs

with fund investors

with large companies, etc.

Cumulative number

Number of interactions with potential

Cumulative number

Number of companiesof IPOstargets (most recent three years)of fund investors

with which we have contact

1,019

6,603

1,295

15,410

The greatest source of value creation at JAFCO Group is our human capital. For many years, we have consistently
hired new graduates and worked to train investment professionals. Our unique training model has contributed
significantly to the development of the private equity investment market and industry, including fund establishment by
our former employees. In recent years, in addition to our new graduate hiring/training model, we have been
focusing on mid-career hiring in an effort to build a hybrid model for developing human resources.

JAFCO Group’s unique modelHybrid organization combiningof training investment

new graduate hires andOrganizational investment
management structure

professionals

mid-career professionals

supporting strong individuals

Our culture of respecting portfolio companies (entrepreneurs) is continuously passed down not only to our
professionals but throughout the entire organization. A culture in which all employees, regardless of their division orage, cooperate naturally with each other to support the growth of portfolio companies and improve our investment
capabilities has allowed us to develop strong organizational and human resource capabilities. Our organizational
structure that places emphasis on the unique talents of individual professionals while also backing up thoseindividuals is a major feature of the Company.

Human capital

17

JAFCO INTEGRATED REPORT 2022

Number of professionals with

Percentage of

Number of

10 or more years

mid-career hires amongsupport personnelof investment experience

investment professionals

for portfolio companies

20 out of 47

41.3%

27

Note: As of March 31, 2022

JAFCO INTEGRATED REPORT 2022

18

JAFCO Group’s
Value Creation

JAFCO Group’s
ValuesSustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Materiality
Materiality Identiﬁcation Process

STEP

1

Our private equity investment, and particularly our venture investment,
which is where our business originated, is strongly characterized by its
contribution to solving social issues by its very nature. For this reason,
we have focused on private equity investment since our founding
based on our policy of continuing to invest through good times andbad. We believe that our continued investment enables us to achieve
Our Purpose and contribute to the resolution of social issues.

In recent years, the social environment has become increasingly
diverse, and issues have become more complex, making it vital tounderstand society from a wider perspective. With this in mind, we
consider our course of action based on the opinions of our
stakeholders. We will continue to determine our direction for growth
while taking into account a wide range of opinions, and work to
identify and resolve material issues and make improvements.

Identifying Material Issues based on Feedback from Stakeholders
Before identifying material issues, we conducted interviews withstakeholders such as institutional investors with a view to enhancing ourcorporate value. We received a number of comments that our businessof private equity investment itself contributes to resolving social issues.
Based on such feedback, we worked to identify material issues interms of medium-to-long-term issues related to the markets andstakeholders in which and with whom we are involved. After raising awide range of issues, six material issues were identified based on theevaluation axes of internal issues and external demands, as well as
expert advice.

Interviews

Survey

STEP

2

STEP

3

4

Material issues

Social issues facing the Company
Innovation in various industries is essential for the sustainable development of society and economic
growth. The creation of new businesses that address potential social demands, in addition to resolvingsocial issues which have already emerged, is required.

Institutional Investors
Interviewed 5 major institutional investors
Asked about their expectations and requests from the viewpoint of sustainability and the social value that the Company
has createdDirectors, Officers, and Employees
Interviewed 43 directors/independent directors/employees
Asked about the social value that the Company has created and current issues, and what should be addressed in the future

STEP

1. Creation of new businesses that lead the way
in fulfilling social needs

Conducting interviews and surveys with each stakeholder group

Administered to 30 shareholders/institutional investors, 248 fund investors

Identification of issues
from external andinternal perspectives

Identified a wide range of issues to be addressed by the Company, including expectations and requests ofstakeholders (shareholders, investors, entrepreneurs, and employees), and barriers to be removed toachieve medium-to-long-term goals as an entire company and in each division.

From the perspectives of external expectations/interests and importance to our business, the identified

Evaluation of issues

issues were evaluated through a bottom-up framework centered on respective division heads and in light ofthe expectations of each stakeholder group.

Identification ofmaterial issues

PolicyConduct highly selective, intensive investment anddeepen management involvement to achieve high performance

Based on the evaluations of each division, a final prioritization of issues was conducted from a companywide perspective, and six material issues were identified. Four related to our market domain: (1) venture
investment, (2) buyout investment, (3) funds, and (4) ecosystem; and two related to our company domain.

Examples of specific initiatives• Expand the scope of deal sourcing to include companies at an earlier stage with high growth potential
and become involved in their management as a lead investor• Ensure a high level of involvement in business development and deploy a full range of management
resources, through a specialized team to support portfolio companies• Build a business foundation to realize continuous corporate growth in the future

Issues faced by companies are becoming increasingly complex, such as the necessity of adapting to social

2. Growth of companies with social value andpassing on to the next generationand environmental changes, productivity improvement, and the shortage of business successors. The ability

Realize a fresh start by committing to growth throughto revitalize corporate growth must be improved to pass on the technology and assets essential for

an integrated approachsociety’s future.
New industries that support the future must be created to ensure Japan’s medium-to-long-term growth.

3. Expansion of risk money supply in Japan

Since Japan continues to lack a sufficient supply of risk money, it is vital that long-term capital frominstitutional investors in Japan and overseas is allocated to the private equity market, wherein it can gain
value and circulate.

Improve attractiveness of funds as a financial instrument
through high investment performance and management
discipline/transparency of management

As there are many barriers that must be overcome to create new businesses and reinvigorate corporate

4. Establishment of an ecosystem that
supports business creation and growth

5. Continuous organizational development topromote active roles of diverse human resources

6. Reduction of business and management risks
by strengthening governance

19

JAFCO INTEGRATED REPORT 2022

• Commitment by professionals through an integrated approach covering everything from sourcing to exit
• Use of knowledge cultivated through venture investment to achieve corporate growth for the next generation• Establishment of a business foundation that allows continuous corporate growth in the future• Acquisition of new investors by providing a level of returns that sufficiently compensates for lower liquidity• Building trust with investors through highly disciplined and transparent management• Strengthening and expanding collaboration with financial institutions and business firms that support thegrowth of portfolio companies• Acquisition of new investors by providing returns that compensate for low liquidity

growth, a structure that supports society as a whole is needed. Based on a high level of commitment ofForm co-creation partnerships to create new businesses

professionals in various specialized fields, there is a need to reproduce success through the circulation ofand realize a fresh start• Building frameworks to support entrepreneurs and companies through cooperation with universities,
research institutions, and government

diverse knowledge and experiences.

• Awareness-raising/support for career development to expand the flow of human resources to growth industries

Combining diverse viewpoints and a wide range of individual strengths is indispensable for the• Expansion of internal functions, contacts with entrepreneurs/companies, and various networks by
securing diverse human resources through a combination of new graduate and mid-career recruitment

sustainable development of society. To enable each individual to work with enthusiasm and fully
demonstrate potential, companies are called upon to take the initiative to respect diverse values.

Reflecting the diversification and rising complexity of social issues, corporate social responsibility andexpectations from stakeholders are increasing. To meet the demands and expectations of society andrealize sustainable corporate growth, companies are called upon to strengthen their governance.

Promote recruitment of diverse human resources andstrengthen frameworks that support their growth and success• Continuous promotion of on-boarding and internal support programs to support growth• Establishment of a personnel system and a working environment that ensure health and safety as a basis
for success• Strengthen the corporate governance system that supervises and supports management

Strengthen the organizational systemand structure to lower business and management risks• Maintain compliance as a financial instruments business operator and accumulate private equity
investment expertise• Enhance ESG monitoring and the support structure for portfolio companies

JAFCO INTEGRATED REPORT 2022

20

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Sustainability
Realizing a Sustainable Society through Investment Activities

Invest in businesses that have social signiﬁcanceThe first initiative is continued investment in businesses with social
signiﬁcance. The number of businesses that contribute directly tosustainability has increased in recent years. Leading examples arebusinesses working toward a decarbonized society, which is a global
issue, and those that address new lifestyles following the impact of the
COVID-19 pandemic. While our investment targets are not limited to
specific industries or domains, we aim to realize a sustainable society
by discovering hidden value with regard to social issues andcontinually investing in companies with social signiﬁcance.

1

Enhance governance to increase portfolio companies’
awareness of sustainability

The second initiative is enhancing governance to increase portfolio
companies’ awareness of sustainability. While the importance ofcorporate sustainability activities is increasing, there are cases where
portfolio companies cannot satisfy ESG evaluation criteria on theirown. Through active involvement in these portfolio companies, we willchange their awareness of sustainability and link this to improvement
activities, thereby enhancing sustainability in society as a whole.
As described above, we contribute to the realization of asustainable society through involvement in portfolio companies. We
therefore believe that the continuation of our investment activity itself
leads to the achievement of a sustainable society. Our private equity
investment encourages the flow of funds, drives the transformation of
the industrial structure, and enriches society. From a global perspective,
the private equity investment domain in Japan has high growthpotential, and we believe that the expansion of the private equity
market itself contributes to sustainability.

We regard continued investment as a highly important initiative, notonly in terms of business and corporate growth, but also to boost
sustainability in society as a whole. Even when many funds refrained
from investment activities amid significant declines in business
confidence, including the global financial crisis, we continued to carryout consistent investment.
While responding in a timely and appropriate manner to external
demands as the global environment and social systems drasticallychange, our strong dedication to continuing investment through goodtimes and bad will remain unchanged. We will continue to realize Our
Purpose and strive to create a sustainable society through the means ofinvestment, on which we have focused since our inception.

Invest in businesses that have social signiﬁcance2Here we introduce sustainable value that portfolio companies realize through their businesses by dividing them into four categories, three of which are based on the three tiers of the “SDGs wedding cake” model*—biosphere (contributing to resolving environmental issues), society (contributing to resolving social issues), and economy (contributing to the innovation and development of industries)—and the other is enhancing
governance and information disclosure.
* The SDGs wedding cake model is a conceptual model developed by Professor Johan Rockstrom, co-founder and former director of the Stockholm Resilience Center at Stockholm University, Sweden.

Biosphere: Contributing toresolving environmental issues

TeraWatt Technology Inc.

Society: Contributing toresolving social issues

Economy: Contributing to the innovationand development of industries

Enhancing governance andinformation disclosure

Next Innovation Inc.

TIER IV, INC.

LegalOn Technologies, Inc.

TeraWatt Technology conducts research and development of

Next Innovation offers Smaluna, a one-stop medical consultation

TIER IV has developed Autoware—an open-source software

LegalOn Technologies offers LegalForce, an AI-based software thatnext-generation lithium-ion batteries with high energy and power

platform for contraceptive pills that allows consultation,from Japan for autonomous driving systems. The company

supports contract reviewing. It helps to prevent hidden risks fromdensity. It is contributing to the realization of a decarbonizedexamination, prescription, and delivery arrangement overcontributes to the social implementation of autonomous

being overlooked or required clauses from being omitted in contracts

society through the development of next-generation batteries thatsmartphone. The company also provides a corporate welfare

driving systems through its two platforms: Pilot.Auto andand allows users to search for clauses used in the past, thereby

can extend the driving range of electric vehicles, which are inservice and has developed a free sanitary product service,

Web.Auto.

contributing to improving the efficiency of highly specialized

increasing demand, and increase the payload capacity and flightcontributing to empowerment and quality of life for women.

legal practices and strengthening corporate governance.

time for delivery drones.


Sharing Energy Co., Ltd.

Gojo & Company, Inc.

Realization of a sustainable society
through continued investment activity

Portfolio
companies

Realization of a sustainable society
through portfolio companies

Synplogen Co., Ltd.

Sustainable Lab Inc.

Sharing Energy offers Share Denki, a third-party ownership service

Gojo & Company operates microfinance services in India,

Synplogen utilizes its proprietary DNA synthesis technology (OGAB

Sustainable Lab offers TERRAST, a tool that enables companies tofor solar power systems for detached houses. The company

Cambodia, Sri Lanka, Myanmar, and Tajikistan for low-income

method) to provide ultra-long and complex DNA synthesis services

easily collect and analyze non-financial information. It contributes

contributes to a decarbonized society by transforming the energy

earners who cannot access financial services due to a lack ofand DNA library construction services for various combinations. It

to enhancing governance and non-financial information

system through the creation of distributed power sources and theeconomic infrastructure. The company contributes to providing

also applies its technology to the design and development of viral

disclosure by managing and analyzing non-financial data,

supply of innovative products.

equal opportunity and expanding freedom by ensuringvectors for gene therapy and production process development,

including analysis of the current status of ESG/SDG management

financial access for all people.

thereby contributing to the development of gene therapy

and industry/competitor/time-series comparisons.

Enhance governance to increase portfolio companies’ awareness of sustainability

As many portfolio companies are yet to establish the necessary organizational frameworks,
we have been conducting compliance checks on a regular basis. In recent years, we havefurther strengthened our efforts in response to increasing social demands for sustainability.
In the pre-investment due diligence phase, we evaluate candidate portfolio companies andentrepreneurs based on our own checklist, which includes ESG items. Then, in the postinvestment support phase, we conduct awareness-raising activities and periodic surveys
based on management guidelines and monitoring indicators with a focus on an ESG
perspective, and our specialist team carries out improvement activities if necessary.
We will continue to contribute to the realization of a sustainable society by raising theawareness of portfolio companies.

Involvement by JAFCO Group’s specialist team1

2Pre-investment
due diligence phase
Corporate evaluation
based on ESG items

Post-investment
support phase
Raising awareness and supporting
improvements to enhance thegovernance of portfolio companies• Corporate evaluation in accordancewith ESG items• Raising awareness based on guidelines
for human capital management, etc.

• Investment judgment based on ourown checklist• Monitoring and supporting
improvements from an ESG perspective

Raising awareness of sustainability

We will contribute to the realization of a sustainable society throughthe following two initiatives for portfolio companies.

products and the establishment of manufacturing platforms.

21

JAFCO INTEGRATED REPORT 2022

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22

JAFCO Group’s
Value Creation

JAFCO Group’s
ValuesSustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Message from the CFO
Overview of profit structures

Fund profit structure

We will improve our capitalefficiency and build a solid

JAFCO’s capital
contribution

ROI

Capital gains(Investment management
capabilities)

Fund profit

financial foundation topromote growth strategies.

JAFCO’s profit structure

Success fees

Fund size
Increase in line withtarget market expansion

External capital
contribution(Fundraising capabilities)

Fund management fees

Hiroaki Matsuda
Chief Financial Officer
Higher performance increases a fund’s attractiveness as a financial instrument, facilitating external fundraising

Building a Strong Financial Foundation and Improving Capital Efficiency
Since its founding in 1973, JAFCO has continued to invest in

The most important aspect of maintaining a solid financial position

Put simply, our venture investment is a business in which we createcompanies, and had some sudden unpredicted bankruptcies.

companies working to create new businesses or to revitalize theiras a company making private equity investments is the ability tonovel businesses together with entrepreneurs. Being a business of great

However, the policy has allowed us to be more closely involved

existing businesses. Looking back, despite adverse events such as theproperly evaluate investment assets. As CFO, I must identify decreases

significance, it is also highly risky and heavily impacted by changing

with each portfolio company and to gather information throughcollapse of the dot-com bubble in 2001, the global financial crisis ofin the value of our investment assets faster and more accurately thantimes. In 2010, amid the continued economic downturn caused by thesmooth communication. It has made it relatively easy for us to2008, and the Great East Japan Earthquake in 2011, we haveanyone else. If we can identify and solve problems early, our2008 global financial crisis, we adopted a policy of highly selective,

identify risks beforehand, detect signs of their manifestation, andcontinued to invest consistently regardless of the circumstances. Wheninvestment professionals can devote themselves to proactive investment

intensive investment. Prior to that, we attempted to reduce risk andtake prompt preemptive action. The shift to highly selective, intensive

it comes to creating a cycle of economic revitalization and growth, it isactivities. As we move forward with this business, I believe it isimprove performance by diversifying investments among many

investment stabilized our profitability, enabling us to achieve a strong

very important to continue investing even amid difficult circumstances.

extremely important that we create such a frontline-oriented environment

companies, but due in part to the financial crisis, we could not achievefinancial foundation.

As CFO, my most important mission is to ensure that we have theand disclose the fair valuation of our private equity holdings—a key

the expected results. As a result of shifting to highly selective, intensive

financial foundation and fundraising capabilities to make bold

category of our assets—with transparency to fund investors, as well as

investment, the number of portfolio companies decreased, but webasically, have been making an effort to build a solid financial structure

investments in businesses that can potentially change the future.

JAFCO’s shareholders/stock investors. Our investment professionals

could focus more on management involvement and gaining a deeperthat would allow us to stably finance our own investments in our funds.

Our main income sources are capital gains on our interests in funds

maintain a close dialogue with the management teams of portfolio

understanding of their business conditions, allowing us to generate

However, in 2021 we specified the amount of capital needed tothat we manage, and the success fees and fund management fees wecompanies in a variety of ways to gain a thorough understanding of

more favorable results. Meanwhile, increasing the amount invested incontinue our investment activities and decided to return any surplus toreceive for the management of external capital entrusted to us by fundthe status of their businesses. We have a culture in place in which

each portfolio company meant that capital gains per company wereshareholders to improve capital efficiency. Then we sold off aroundinvestors. The most distinctive feature of our venture capital funds is thatthese investment professionals and members of the Businesshigher and overall fund performance generally improved. Highly

40% of the shares we held in Nomura Research Institute, Ltd. (NRI) and

we ourselves also invest in the funds. In doing so, we, the fund manager,

Development Division and Administration Division discuss the potential

selective, intensive investment has also made it easier to grasp thebought back our own shares totaling ¥50 billion. Going forward wetake on risk ourselves to show our investors that we are strongly

downside risks openly and honestly. This information reaches me as

downside risks of each portfolio company. Prior to the policy change,

will take further measures to improve our capital efficiency.

committed to the fund performance, and also to align our returns withwell. It is one of our greatest strengths to be able to accurately evaluate

we were not always able to identify the downside risks in portfolio

those of investors. Doing so has enabled us to raise funds on a steadyassets based on such information.

Much discussion has been made about our capital efficiency. We,

basis and focus on improving the funds’ return on investment (ROI).

23

JAFCO INTEGRATED REPORT 2022

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24

JAFCO Group’s
Value Creation

JAFCO Group’s
Values

Reflection on the Fiscal Year Ended March 31, 2022

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Illustration of our vision and quantitative targets

New fund size

Net assets

Profit structure

Fund size expands in linewith target market expansion

Looking back on the business environment in the fiscal year ended
March 31, 2022, although the number of IPOs in Japan reached120, the market underwent a significant correction in the second half

ROE
Around 15–20%(¥ billion)

against the backdrop of U.S. monetary policy and geopolitical risks.

(¥ billion)

250

As a result, we could not predict how it would affect the performance(¥ billion)

Net income
22.0–25.0

190.0

of portfolio companies and the fundraising of our new fund. These

Success fees

43.5

circumstances led a number of planned domestic IPOs to beExternal
capitalcontribution

150

postponed or scaled down, but even in this business environment, theCompany’s performance remained relatively strong. Capital gains on

NRI shares(four domestic1 and two overseas), amounted to ¥12.6 billion,
exceeding the previous year. The amount of investments also exceeded

60

that of the previous year, reaching ¥37.1 billion on a global basis.
The IPO by Visional, Inc. made up a significant part of the year’s total

Present

50

Operational
investment
securities

85.0

20%

Medium to long termPresent(approx. 10 years ahead)

capital gains. I believe that this large-scale IPO with a market

35.0

89.0

JAFCO’s own capital contribution
40%

Cash

61.2

200

90

listed and unlisted stocks combined, including those from six new IPOs

20%

Net assets
120.0

Medium to long term
(approx. 10 years ahead)Fundmanagement fees

6%

25%

11.0
15%
15%

70%
Present

Capital gains

55%

Medium to long term
(approx. 10 years ahead)

Note: Total amount of new domestic and overseas funds.

capitalization over ¥200 billion proves the potential of our highly
selective, intensive investment policy, and that venture investment isand will continue to be a growing domain.
As for shareholder returns, we completed the aforementioned sharebuyback (totaling ¥35 billion; 14.3 million shares ) approved in
2

April 2022, and canceled 7.63 million shares (9.4%4 of the numberof shares outstanding) in May 2022.
target and announced a policy of paying out 3% of shareholders’February 2021, and canceled a total of 16.74 million treasury shares(17%3 of shares outstanding) by June 2021. In addition, we conducteda three-for-one stock split on February 1, 2022, to increase stock
liquidity. Moreover, we completed a share buyback (totaling

1. Excluding an IPO (Kibun Foods Inc.) from our investment securities portfolio.
2. Figures after the stock split in February 2022.
3. Number of shares outstanding (including treasury shares) as of the end of March 2021.
4. Number of shares outstanding (including treasury shares) as of the end of March 2022.

¥15 billion; 7.41 million shares2) approved in October 2021 by

In addition, being focused on further improving ROE we have set aequity (average of the beginning and end of the period) or 50% of net

10-year management goal of decreasing net assets from ¥188.8 billion

income, whichever is greater. It is meant to both improve capitalas of September 30, 2022, to around ¥120 billion. Furthermore, ourefficiency and align our interests with those of our shareholders.

growth strategies are centered on further improving investment

However, as an exception, for the fiscal year ending March 31,

performance by enhancing our investment management capabilities and2023, the dividend will be the greater of items a) or b) below.

expanding fund size by enhancing our external fundraising capabilities
in line with the expansion of target markets. Moreover, we are lowering
our investment ratio in new funds from 40% to around 20% over the nexta) ¥150 per share

Next Challenge

investment in funds based on this target ratio, and returning the fundsb) Dividend per share calculated by deducting the amount ofIn the midst of these efforts, in August 2022 a group of shareholders
proposed to us a measure to increase shareholders’ value including a

to continue investing in any business environment, we had previously
defined ¥120 billion of cash level including NRI shares collectively as

our corporate value.

the necessary funds for future investment activities. However, we decided
to halve it to ¥60 billion, as an amount expected to be invested overpreviously allocated to self-funded investments to shareholders. Throughthe share buyback to be implemented in the current fiscal year

these measures to improve capital efficiency, we aim to increase thefrom net income, including the gain on sales of NRI shares

total shareholder return ratio, including through share buybacks, tobetween 60% and 100%+ and ROE to between 15% and 20%.

In addition, in order to maintain a financial position that enables us

as issues to be addressed, we further looked into measures to improve

To Our Shareholders and Stock Investors

perpetual growth; investing in bold visions—by making venture andthe following three years, and any cash in excess will now be used forbuyout investments through our funds. With the aim of sharing the results

share buybacks to improve capital efficiency. We sold our entireof our efforts with shareholders and achieving further growth, weholdings in NRI and used ¥42 billion of the after-tax proceeds to buy

announced our Basic Policy for Enhancing Corporate Value in November

back our shares. We will promptly cancel the acquired treasury shares

The recently disclosed Basic Policy for Enhancing Corporate Value ishigher profits, and improving capital efficiency to boost our corporate

2022, which calls for the improvement of capital efficiency through theto reduce treasury shares to 3% of the shares outstanding.

a transformative 10-year plan for improving our capital efficiency andvalue. By strengthening corporate governance as a public company,

promoting growth strategies. To implement the short-term measures andwe will establish an organizational foundation in which management

reduction of net assets and the promotion of growth strategies.

25

investment ratio to around 20%.

takeover bid. Having already recognized much of the proposal content

Up until now, we have been working to realize Our Purpose—Fueling

10 years. Therefore, we are gradually reducing the amount of our own

As for dividends, owing in part to the results of our highly selective,

The goal is to increase the level of profit and significantly improve

intensive investment, we have been building a financial structure thatto achieve the medium-to-long-term targets it sets forth, our directors,

and human resources can be passed on in a stable manner, andcapital efficiency by reducing net assets based on growth strategies,

allows us to generate steady profits. Accordingly, while maintaining a

officers, and employees will put every effort into further strengthening

contribute to the realization of a sustainable society through ourand to expand the size of new funds while gradually reducing oursolid financial foundation, we have adopted a dividend payout ratio

our investment management and fundraising capabilities, making

investment activities.

JAFCO INTEGRATED REPORT 2022

JAFCO INTEGRATED REPORT 2022

26

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Business Process

JAFCO Group has established a system for increasing the reproducibility of investment capabilities by sharing andmaximizing investment professionals’ individual competence and commitment across the organizationl About every three years, the Fund Management Division plays the central role in fundraising for domestic flagship funds in collaboration with the Investment Division, the Structured Investment Division, and the Business Development Division.
l For each investment, we form the optimal team and provide comprehensive growth support from the deal-sourcing stage to exit.
l For enhancing the corporate value of portfolio companies, a specialist team is formed for each company to provide systematic support according to the growth stage, ranging from recruitment and sales and marketing support to IPO preparation.

Fund Establishment

Main Activity

Deal Sourcing

Investment Decision
and Execution

Enhancement ofCorporate Value
Our investment professionals who are in charge of
portfolio companies work on resolving issues witha sense of ownership, coming up with growthscenarios together with entrepreneurs. Furthermore,
at JAFCO, we have dedicated personnel to provide
support to portfolio companies. This support includes
functions that are essential for growth, such as
recruitment, marketing and sales support,
development of back-office functions, and IPO
preparation. In our buyout investments, we maintaina permanent or semi-permanent presence at
portfolio companies to proactively improve
management at the post-merger integration (PMI)stage and accelerate business growth.
In addition to fund investors and portfolio
companies, we have built up a network oforganically connected business firms. We continue
to further enhance and expand this network.

In order to secure continuous and stable investment

With private equity investments, high-quality deal

Because many of the unlisted companies in which we

funds, it is necessary to attract a new investor base insourcing based on careful selection creates

invest do not have the necessary business foundations

addition to repeated investment from existing investors.

reproducible success. Our deal-sourcing

in place, the main focus of our corporate value

Our primary investors are financial institutions andcapabilities, which we have cultivated throughassessments is on identifying business potential andbusiness firms. Unlisted securities have low liquidity,

interactions with numerous entrepreneurs, are one ofmeasuring management quality. To determine businessand it takes around five to 10 years to recover

our strengths. Based on our approach of constantfeasibility, we verify such key factors as market growthinvested funds through exits. Because of this, the Funddeal sourcing by everyone from partners to young

potential, competitiveness and uniqueness of productsManagement Division builds trust with fund investors

associates who have just joined the Company, eachand services, and innovativeness of technology. We

by providing highly transparent reporting andyear we meet with more than 2,000 new investment

also analyze and conduct negative screening on

information, and communication according to theircandidates that we have had no prior interaction

growth potential from the standpoint of ESG and theindividual needs. In addition to returns based on fundwith. Our proprietary database of records from

SDGs. In venture investments, the most important

performance, we emphasize our social significancethese meetings is an unmatched strength.

element is assessing the quality of the management

and the attractiveness of our investments in our

Around one-third of our investments come fromteam, which our investment professionals do over thecontinuous efforts to cultivate a new investor base thatreferrals and unsolicited inquiries. Referrals fromcourse of ongoing dialogue. Together with an

empathizes with the aims of our investment activities.

our human network, including the management

investment team, a member in charge of investment

teams of past portfolio companies, are also an

evaluation provides an assessment from an objective

important source of deal leads.

standpoint, and the Investment Committee makes theExit

We select exit strategies that realize both portfolio
company growth and returns to fund investors. In thecase of venture investment, most portfolio companies
plan IPOs at the time of investment. We havespecialists who provide support for listing
preparation, through whom we have supported IPOs
amid various changes in the market environment.
When selecting an exit strategy other than an IPO,
because we hold a certain stake under our policy ofhighly selective, intensive investment, we are able torealize an optimal exit, including M&A, for portfolio
companies, based on agreement with the
management team.

investment decision based on the consensus of allpartners using this feedback.

JAFCO Strengths

Attractiveness as a financial instrument thatdelivers stable, high performance

Outstanding volume of interaction withentrepreneurs and companies

Discipline and transparency of management

Information on investment candidates
accumulated through past deal-sourcing
activities

Information provision and communication
tailored to the individual needs of investors

Consistent management involvement, frominvestment to corporate value enhancement
and exit, by forming the optimal team foreach investment

Judgment and insight from partners andexperienced investment professionals
Investment decisions based on the consensus of
all partners

Support by experts specializing in humanresources, back-office functions, marketing,and more according to the growth stage of
portfolio companies

Relevant Divisions
Investment Division(Venture Investment)

Structured Investment Division(Buyout Investment)

Partial involvement"p.29–30"p.31–32

Business Development Division"p.35–36

Fund Management Division"p.37–38

Venture investment¥10.0 billion/29 companies

Buyout investment¥ 3.8 billion/2 companies

Number of referrals from customers

4,607
Number of business meetings conducted

742

s

244

2,193

Amount/Number of new investmentss

Number of investorss(Fiscal year ended March 31, 2022)s¥215.0 billion

Number of first meetings
with domestic companiesss

Domestic funds under management

Quantitative Information

JAFCO INTEGRATED REPORT 2022

Listing preparation support leveraging
experience from more than 1,000 IPOs

Involvement as the main divisions

27

Formulation of exit strategies that fully leveragepotential of portfolio companies

Exits by domestic portfolio companies
Amount of sales¥ 47.0 billion/33 companies

Amount of sales: Actual amount at time of sale
Number of companies: Number of IPOs + Trade sales

JAFCO INTEGRATED REPORT 2022

28

JAFCO Group’s
ValuesVENTUREINVESTMENT

Sustainable
Growth Strategy

JAFCO Group’s
Value Creation

Business Foundationfor Sustainable GrowthHighly Selective Deal Sourcing
Quality deal sourcing and thorough selection by 47 investment professionals who

Keisuke Miyoshi

think through future business opportunities to enable repeated success

PartnerPresident & CEO

Message from the Division Head

Ongoing contact with several hundred startups
Organizational support from the seed stage to ensure thatno promising startups slip throughNew talks

2,193 companies
Referrals from management, conference andpaper research, overseas case study research, media,
angel investors and VC firms, and startup communities

Carefulselection

Partner involvement/
Investment consideration

Carefulselection

184 companies

New investments

31

Thorough due diligence
Formation of teams for each deal

companies

Partners

6

Investment professionals❶ Yutaro Saka, Partner❷ Mizuki Takahara, General Manager ofthe West Japan Branch, Partner❸ Keisuke Miyoshi, President & CEO, Partner
❶

❷

❸

❹

❺

Corporate
Data

47(As of March 31, 2022)(As of March 31, 2022)❹ Atsushi Fujii, Partner

Notes: 1. Results for the fiscal year ended March 31, 2022.
2. Numbers of companies and investment professionals
include those for buyout investments.

❺ Tomotake Kitazawa, Partner❻ Shozo Isaka, Partner❻

Business Environment and Challenges
Strengths and Strategies
Strengths

A startup ecosystem that is developing into a mature market
Strategies• Ability to identify new trends and engage with entrepreneurs who aretackling those trends at an early phase• Experience in building businesses with entrepreneurs and the mindset
of a Co-Founder• Human resources development capabilities to systematically pass onthese strengths• Further pursue highly selective, intensive investment
Expand the investment domain to earlier phases and provide resources
necessary for launching businesses
Follow-on investment to maximize enterprise value and full involvement
in exit• Develop diverse human resources and frameworks for perceiving
diverse changes

The most significant change in the business environment over the past
10 years has been the increase in and diversification of entrepreneurs
in Japan. Startups have become established as a career choice for awide range of people with the rise in the number of serial
entrepreneurs, high-level workers who are starting up companies,
and employees of large companies changing jobs to startups.
In this age of VUCA,* changes that also present opportunities forentrepreneurship are becoming faster and more significant. The
providers of funds to support entrepreneurs and startups are also
becoming increasingly diversified.
While the number of investment opportunities is increasing, we mustbe even more selective and create larger businesses and industries bycollaborating with other fund providers.
* Volatility, uncertainty, complexity, and ambiguity.

Future Strategy
Social Role (Value Creation and Track Record)

Further evolution of highly selective, intensive investment: Faster and with deeper involvement

Perceive changes in society and enhance social evolution
The Venture Investment Division has been the Company’s core businesssince its establishment and has continued to pursue the creation of new
industries together with entrepreneurs. Our division has been investing
primarily in Japan, as well as in the United States since 1984 and in
the rest of Asia since 1986.
Continuation and expansion of venture investment lead to anincrease in the number of entrepreneurs who take on challenges in
response to social changes and to the creation and development ofindustries that will develop a more prosperous society. The experienceof that success leads us to take on the next new challenge.

We are a pioneer in venture capital in Japan and have continued topursue the launch, continuity, and development of venture capital
investment. To date, these efforts have resulted in more than 1,000
company listings. Another feature of our efforts is that we continue toinvest at all times and take social responsibility in expanding theprivate equity market. We believe that continuing to invest in startups
without interruption to the fund, regardless of whether the market isgood or bad, is essential to finding new challenges to pursue. We willcontinue to take on such challenges together with entrepreneurs andthereby contribute to the enhancement of social evolution.

To seize investment opportunities amid diverse changes, our investment
professionals will need to diversify their respective areas of expertiseand interests. Through greater diversity in the development and hiringof investment professionals, we aim to approach a broader range ofinvestment opportunities more quickly. Moreover, in addition to ourexisting outbound approach to candidate companies, we will
strengthen our inbound efforts to attract those that are in the earlystartup and preparation phases.
While a higher growth rate to exit (i.e., ROI) can be expected wheninvesting at an earlier stage, this also carries the risk that the businesswill not take off. We will continue our long-standing efforts to become
closely involved in portfolio companies in order to respond to suchrisks. Leveraging our experience from past successes, we deepen our
involvement in building the business, thereby accumulating even moreexperience. We believe that being deeply involved with the company
from initial investment to exit, with the mindset of a Co-Founder, will
boost the probability of success and help lower downside risks.
One of our strengths is our multi-layered structure of human resources
consisting of those with more than 10 years of experience as
investment professionals, young associates hired as new graduates,
and mid-career professionals with specialized knowledge. We aim toachieve further expansion by sharing and passing on the knowledge
and experience we continue to gain through the evolution of our highly
selective, intensive investment activity.

Emphases in Venture Investment

Our investment policy of “highly selective, intensive investment” and our identity as a Co-FounderHighly selective investment requires pioneering abilities backed by the
curiosity and inquisitiveness to continually pursue the social changes
and investment opportunities that we target. Our emphasis has been
on seizing business opportunities created by changes in society without
limiting ourselves to a specific investment domain. Within that scope,
we carefully select investment candidates, pursuing businesses with ahigh rate of change and a significant impact on society.
Being highly selective on investments enables more intensive

29

JAFCO INTEGRATED REPORT 2022

investment in terms of amount, and deeper involvement in our
portfolio companies. We seek to maximize enterprise value by
providing the necessary resources, including through follow-on
investment, to accelerate business growth.
As an organization, we have also emphasized sharing and passing
on our identity as a Co-Founder to maintain a sense of ownership—
sharing the same perspective as the entrepreneur, from the phase ofdeal sourcing to involvement in the portfolio company.

HIGHLIGHT

Establishment of the West Japan Branch

In September 2021, the Chubu and Kyushu branches were integrated into the Kansai Branch
to become the West Japan Branch. Both branches had been operated by a small number of
personnel, but we decided to integrate them after determining that consolidating personnel
with extensive investment experience outside the Tokyo metropolitan area at the West Japan
Branch would lead to stronger support for local startups.
As communication with portfolio companies is increasingly conducted online due to
COVID-19, we believe that building strong relationships of trust through in-person communication
will help to set us apart from competing venture capital firms. Going forward, we will skillfully
make use of both in-person and online communication with the aim of further enhancing
communication with entrepreneurs and thereby acquiring unique investment opportunities.

Amount of funds raised by startups
outside the Greater Tokyo area
¥106.2 billion¥58.6 billion

2017

2021

Source: INITIAL Inc. (as of July 20, 2022)
Notes: 1. Figures for each year are based on datacollected as of the reference date.
2. Regions excluding Tokyo, Kanagawa,Chiba, and Saitama.

JAFCO INTEGRATED REPORT 2022

30

JAFCO Group’s
ValuesBUYOUTINVESTMENT
Message from the Division HeadJAFCO Group’s
Value Creation

Ko Minamikurosawa

Sourcing

Execution

PMI

Partner (SV6)❶ Keisuke Aoyama, Managing Director

Approach• Continually provide a newperspective and ideas based ona deeper understanding of theportfolio company’s business andtechnology, with unwavering
ambition and commitment❷ Ko Minamikurosawa, Partner, General Manager of Structured Investment,
Managing Director❸ Hirogi Nakayama, Managing Director❸❹

Management
strategy

Strategies• Corporate culture that boldly takes on unprecedented challenges• Utilization of knowledge accumulated in venture investment• Throughout each investment a dedicated team ensuresconsistent responsibility• Create a framework to enhance investment and value-creation
activities for portfolio companies• Establish a strong team that ensures stable performance

Gain control, solve management issues and increase the value of portfolio companies
business models and help them chart a new growth curve.
In Japan, small- and medium-sized enterprises account for the
majority of companies, with top management advancing in age andsuccessors in short supply. As such, addressing the issue of businesssuccession is an urgent matter. The aim of our buyout investments is toserve as a vehicle for the issue of business succession by acquiring
management rights at small- and medium-sized enterprises with nosuccessor and giving them a second start while enhancing theircorporate value.

Values cultivated as a venture capital firm guide us to success in buyout investments

31

JAFCO INTEGRATED REPORT 2022

Operations

Administration

Branding

Active utilization of technology/DX support
JAFCO Business Development Division

JAFCO’s Network• Business development teams established in Japan, North
America, and Asia dedicated to support enhancement ofcorporate value• Extensive network of portfolio companies, fund investors,
and others formed through business activities spanningroughly half a century• Provision of expertise for enhancing management as wellas support for cultivation of sales channels, joint
development of IoT businesses, M&A/business alliances,and global expansion• Utilizing our diverse network that ranges from cutting-edge
startups developing AI-based businesses to large
corporations and educational institutions such asuniversities, we will refer customers, support joint R&D
projects, introduce advanced services to enhance business
operations and service value, and moreinvestment execution, post-investment value enhancement, and the exit,
and they maintain awareness and unwavering ambition as owners of
portfolio companies. Another of our strengths comes from the fact that

we can collaborate with the Business Development Division and withpersonnel possessing many areas of expertise on challenges thatcannot be solved by our division alone.

Business Environment and Challenges

The M&A market for Japanese companies is growing in line with anincreasing number of deals related to business succession of small- andmedium-sized enterprises, coupled with a stable number of carve-outsof subsidiaries/affiliates from large corporations as a consequence ofdigital transformation (DX) and management reforms. In the fiscal year
ended March 31, 2022, the number of M&As in Japan exceeded thatof the previous year. The market for private equity funds in Japan also
continues to expand. Based on the outlook of these market
environments, our division will concentrate management resources onfurther expansion of buyout investments.
One of the key challenges at present is management of the JAFCO
BO7 Investment Limited Partnership (BO7), established in June 2022.
Targeting securities issued by unlisted companies in Japan, the Fundleverages LBO* and other schemes to acquire majority shares with theaim of making buyout investments. Securing and training humanresources is essential for the successful management of dedicated funds.
* Leveraged buyout: Corporate or business acquisition utilizing borrowed funds.

Future Strategy

Achieve stable performance and sustainable growth of buyout funds

Emphases in Buyout Investment

Our track record in buyout investments goes back 24 years, and as of
the fiscal year ended March 31, 2022, we have invested in a total of
52 companies, of which 38 have been successfully exited including
six IPOs. Our strength lies in the knowledge we have acquired throughour extensive track record in venture investments and our businessdevelopment ability based on a strong presence in the industry and oursocial credibility.
The Venture Investment Division has accumulated a wealth of
information on cutting-edge technologies and services of startups andother companies, as well as the management challenges they face.
Moreover, it has built a vast corporate network cultivated over its 49
years in investment and fund management operations. These resources
give us a major advantage in buyout investments.
We also believe that our approach of identifying the true nature of

Finance

Capturing growth markets with our buyout-dedicated fundSocial Role (Value Creation and Track Record)

Buyout investment refers to a type of investment in which a company
acquires more than 50% of the equity share capital of a portfolio
company, takes control of management, and seeks to increase
corporate value by reviewing management strategies and implementing
various measures. Buyout investments executed by our division are very
unique in that we are able to leverage our defining principles andknowledge as a venture capital firm in our collaboration with portfolio
companies. By providing portfolio companies with the knowledge andvalue-adding measures we have accumulated through our extensive
track record in venture investments, we are able to transform theirMarketing❹ Masataka Kobayashi, Managing Director

Strengths and Strategies
Strengths

Exit
JAFCO Buyout: Post-Investment PMI Approach

General Manager of Structured Investment
Managing Director (BO7)• Work closely with management,
especially in the first 1–2 years
after investment❷

Corporate
Data

PMI Utilizing JAFCO’s Strengths

PMI Style❶Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

risks and boldly pursuing business opportunities gives us the edge overother buyout investment funds, and the mindset that this approachembodies is part of the corporate culture that we have nurtured overmany years as a venture capital firm. We see it as important to execute
management and operations from the same perspective as the
management and employees of the portfolio company. We willemphasize the Three Actuals Principle (the actual place, the actual
goods, and the actual situation) as we move forward with change.
This way of thinking is a distinctive characteristic of the Company,
which has guided many startups to success. It is important to always
approach things with a sense of ownership in order to successfullyreform the management of portfolio companies. Division personnel arein charge of everything from sourcing (identifying investment
opportunities) to investment scheme review, negotiations with sellers,

Our efforts to achieve stable performance and sustainable growth ofbuyout funds consist of (1) creating a framework for the smooth
investment and value-adding of portfolio companies and (2) training
outstanding human resources and establishing a system that ensures
their stable performance.
Our division’s primary focus is on buyout investments in small- andmedium-sized business succession deals with growth potential, but wealso make hybrid investments, combining elements of both venture andbuyout investments, to acquire early-stage companies. Regardless ofindustries or sectors, we will develop companies falling under thefollowing themes.

Investment Targets(1) Companies with competitive brands, intellectual assets, networks, and operational know-how(2) Companies that are starting to become competitive in a growing market(3) Companies that have already established a significant position in a niche market(4) Companies with products and services that have the potential for global expansion(5) Companies with growth potential utilizing JAFCO’s resources

JAFCO INTEGRATED REPORT 2022

32

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Portfolio Company Case Studies

Visional, Inc.

Venture Investment (Exited)

Soichiro Minami
Representative Director and CEO
Visional, Inc.
Based on its mission of “Persistent Creation of
New Possibilities,” Visional operates various
businesses that promote industrial DX, includingin the HR tech domain. It aims to build an
ecosystem that supports corporate humancapital management (HCM) strategies mainly
through its high-level job site Bizreach and the
HRMOS Series of human capital utilization
platforms. It is also working to launch new
businesses in the M&A, logistics tech,cybersecurity, and sales tech domains.

Buyout Investment (Exited)

A “comrade-in-arms” who has helped us build a foundation
ever since we were just a small unknown team

“In the end, nothing is more important than people”
provided an impetus

The ¥200 million investment from JAFCO in 2010 was Bizreach’s first financing. At the time, the market
was in a slump following the 2008 financial crisis, so it was very rare for a Japanese startup to raise
funds in excess of ¥100 million. We were turned down by every venture capital firm except for JAFCO.
JAFCO members visited our office, which was a converted studio apartment in a multitenant building,and I still vividly remember them saying, “We want to invest in your team.”
Since then, we have maintained a relationship with JAFCO for more than a decade. In December
2010, JAFCO decided to invest ¥500 million in our newly established subsidiary Luxa, and weworked together until it was sold to a business firm in 2015 (during that time, it had grown into anorganization of about 200 employees).
From a small unknown team, we have grown into a company with annual sales of ¥43.95 billion
and operating income of ¥8.32 billion (in the fiscal year ended July 31, 2022). There are so manystories that cannot be told at once, but JAFCO has been like a “comrade-in-arms,” helping us throughout
the process of foundation building, from making the rounds to customers and investors through tobusiness development and fundraising.
JAFCO has always respected and trusted the approach that our management team and I have taken,
while providing logistical support for our growth. I hope that JAFCO will continue to commit to thecreation of new businesses that have an impact on society and pave the way for the future of Japanand Asia by being an indispensable partner for many startups.

In 2014, we had fallen into difficult circumstances and were looking for a new sponsor to revitalize ourbusiness. This was when JAFCO took an interest in our business. Business assessment is, of course, an
important part of JAFCO’s due diligence, but being presented with the policy of “In the end, nothing ismore important than people” was a major impetus for us.
Immediately following the investment, numerous issues needed to be resolved to ensure business
continuity, so the situation was unpredictable. JAFCO presented us with options and proposals for eachof the issues and worked with us to implement reforms. In particular, they provided strong support forbuilding a foundation for growth across a variety of aspects, including pricing, business restructuring,and promotion of in-house production.
They also accompanied us to exhibitions in Japan and overseas where we showcased our products
and sometimes on visits to overseas customers. It was a huge encouragement to have a partner that
believed in the distinctiveness and growth potential of our business working closely with us.
The results of the structural reforms have provided us with a solid foundation for growth. Since entering
the growth phase, as we have worked to develop new businesses that leverage our strengths, JAFCO
has provided us with wide-ranging support, including the use of its network. We have also realized asolid profit structure that differs completely from the one that existed before JAFCO’s investment.
I believe that the growth of small- and medium-sized manufacturers is essential to boost the Japanesemanufacturing industry. I hope JAFCO continues to support the creation of world-class manufacturing
companies through its investments.

Koichiro Ikeda
President
Isuzu Glass Ltd.
Isuzu Glass is a manufacturer of optical glassparts. Based on its technology in the glass
melting, glass molding, and optical design
fields, it operates the melting business which
manufactures optical filters, the molding
business which manufactures optical lenses,
and the optical design business which offers aone-stop solution encompassing everythingfrom optical design to manufacturing (including
outsourcing) and assessment.

Newly listed (IPO) in April 2021

Venture Investment (Portfolio Company)

33

Isuzu Glass Ltd.

JEPLAN, INC.

Buyout Investment (Portfolio Company)

IZAWA TOWEL Co., Ltd.

JAFCO was the first to acknowledge our idea
and make an investment decision

Creating an environment where roles are clear andwe can focus on business growth strategies and operations

I founded JEPLAN in 2007 with the ideals of giving value to waste as a resource and recycling
everything. At the time, the terms “sustainability,” “circular economy,” and “ESG” were still notcommonly heard, so there were occasions when we received harsh feedback that it would be
impossible to run a profitable environmental business. Nonetheless, we worked to develop a businessand technology that would contribute to the formation of a recycling-oriented society and realize bothprofits and growth. Finally, in 2015, eight years after our foundation, we came up with the idea thatwould serve as a framework for our current business. The first company to acknowledge the value of
our idea and make an investment decision was JAFCO.
Since then, we have overcome a number of challenges to realize that idea, and in the seven years
since the investment from JAFCO, we have contributed to the formation of a recycling-oriented society
and achieved profit growth. Over the next seven years, we hope to expand the scope of ourcontribution to the formation of a recycling-oriented society beyond Japan to the entire world, based on
our track record and technology. It is still too soon to look back, but over the past seven years, JEPLAN
has overcome many challenges that we might have otherwise given up on by ensuring that we adhered
to the purpose of our agreement with JAFCO, our first investor. Demands for change tend to be loud,but of course, there are some things that should not change. I hope that JAFCO will continue to play its
part in adhering to the purpose of the agreement, and I believe that this will serve as a compass to help
many founders navigate the waves of challenges they are sure to face.

The towel industry is still old-fashioned, and many companies focus on reproducing their past successes
or creating hit products. In contrast, we felt that it was important to study the market as a whole andfind out where the industry’s problems were and where end users were not being served.
Fortunately for us, a mass market had not been established in the towel industry. As a result of ourefforts to build it ourselves, we were able to reach a stage where an IPO was in sight. We received
proposals and advice from many stock listing support companies, but JAFCO was the one that provided
us with the clearest strategy for the IPO and beyond. They gave us the strongest sense of commitment togrowth and depth of engagement. The capital alliance further clarified our roles. JAFCO led the way inestablishing a roadmap and hiring human resources for the IPO, while we focused on business growthstrategies and operations.
On a manufacturing cost basis, the size of the global towel market is around ¥1 trillion. If we canachieve sales of ¥200 billion, which represents 20% of this market, we will be able to claim the top
market share. I hope to take advantage of JAFCO’s knowledge and global network as we substantiallyaccelerate the expansion of our market share after the lPO by implementing M&A and other activities.

JAFCO INTEGRATED REPORT 2022

Masaki Takao
CEOJEPLAN, INC.
In pursuit of its vision of “recycling everything,”
JEPLAN is working on horizontal bottle-to-bottle
and clothing-to-clothing recycling, based on its
strength in commercial production of recycled
PET resins using the proprietary chemical
recycling technology BRING Technology™, inaddition to creating supply chain mechanisms.

Shoji Izawa
President
IZAWA TOWEL Co., Ltd.
Izawa Towel manufactures and sells towels.
It provides OEM and ODM products primarily
to major retailers. Based on its mission tocreate mass-market towels that will serve as
the global standard, it is strongly committed to
manufacturing towels that are both reasonably
priced and comfortable to use.

JAFCO INTEGRATED REPORT 2022

34

JAFCO Group’s
ValuesBUSINESSDEVELOPMENT

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Bringing Portfolio Companies’ Businesses to the Public Quickly and Widely

Naoki Sato
Partner (SV6)
Corporate Officer
In charge of Business Development

Message from the Division HeadJAFCO Group’s
Value Creation

Support for business development and fundraising through proactive involvement in management decisions
20 business development professionals* support business launches together with investment professionals who create an environment in which
entrepreneurs can focus on their core business* As of April 1, 2022.
Results for the fiscal year ended March 31, 2022

C-level and other executive referrals

Recruitment

MarketingSales support

Organizational development
consulting

Recruited

45 people

Business matching

742 cases

Customer referrals
Tie-up arrangements
PoC project referrals

Strengths and Strategies
Strengths

Strategies• Overwhelming experience and extensive resources for supporting
portfolio companies
More than 20 specialists in recruitment, marketing and sales support,
back-office development, IPO preparation, and other fields
JAFCO’s own unique network and know-how (past results and track record)

Solving challenges in innovation at startups and large companies
Support for new business creation through conferences, community
operations, and more

Adding value to many portfolio companies
companies, those related to sales and marketing, hiring and otherhuman resources tasks, and back-office functions are essential. We
have 20 specialists (as of April 1, 2022) in our division dedicated tovalue-adding activities.
In addition, having assisted with more than 1,000 IPOs, we havecultivated unique know-how in guiding startups to success, support
systems for hiring C-level executives and building an organization
based on growth stages, and a network that includes more than
15,000 large corporations, all of which enable us to contributesignificantly to the value of portfolio companies.

Emphases in Business Development

Tying knowledge cultivated in past venture investments to the success of portfolio companies

35

JAFCO INTEGRATED REPORT 2022

Administrative division establishment

IPO consulting

Tool selection

30 companies

Business Environment and Challenges

Differentiation from other investment companies is essential amid heated venture investments

Social Role (Value Creation and Track Record)

The Business Development Division has been accumulating tangible
and intangible knowledge for more than 20 years through its support
activities. One of the things we value is “frontline presence.” In recent
years, many entrepreneurs prioritize approaches and convictions they
can relate to over existing values that have become obsolete. We takean approach of empathizing with such entrepreneurs, which we
describe as “frontline presence.”
Another value we embrace is reproducibility. Portfolio companies
and investors are constantly exposed to the risk of failure. The tangible
and intangible knowledge that the Group has accumulated is precious

IPO consulting• Increase success probability of portfolio companies• Expand the startup market and establish an ecosystem• Support for startup entrepreneurs that emphasizes frontline presence

The support necessary to improve corporate value differs depending on
the growth stage of portfolio companies. According to the growth stage,
the Business Development Division provides the necessary resources to
add value to portfolio companies. For startups whose businesses are at
the conceptual stage, we serve as a reliable advisor when hiring
human resources to support management, expanding sales channels,
or establishing development and marketing strategies for their products
and services. For those businesses that are at the commercialization
stage, we provide support for cultivating business partnerships,
establishing administrative structures, and preparing for listing.
Among activities through which we add value to portfolio

Back-officedevelopment

information for startups as well. We believe it is important to leverage
this knowledge to boost the reproducibility of success. To achieve this,we establish priority areas to address by having entrepreneurs and ourinvestment professionals share knowledge in terms of businessperformance, human resources, and administration. Furthermore, we
promote initiatives for portfolio company growth and the developmentof a startup ecosystem by actively creating community-like forums
among portfolio companies where they can exchange information suchas their successes and failures.

In line with the growing venture capital market in Japan, market players
are diversifying in type. Other than independent venture capital firms(VCs) similar to JAFCO Group, there are VCs affiliated with financial
institutions, government agencies, and universities. In addition, we
have seen the emergence of corporate venture capital (CVC), i.e.,
funds formed primarily by large corporations using their own capital forthe purpose of investing in and providing other support to startups, andan increasing number of large-scale investment funds.
Under such circumstances, our division’s efforts to provide timely
advice and services according to the growth stage of portfolio

companies are vital to differentiating the Company from other sourcesof venture capital.
Furthermore, as sustainability has become the subject of greaterattention in recent years, a growing number of portfolio andcandidate companies are creating business models based on resolvingsocial issues. Recently, the Group has also been assessing businesspotential in addition to risks and social needs in terms of ESG and theSDGs when identifying promising companies in the initial stage ofinvestment activities.

Future Strategy

Building an ecosystem to solve the diverse challenges of portfolio companies
To continuously address the varying needs of portfolio companies, wewill develop ideal forms of support for portfolio companies and help
them evolve in response to the demands of the times. To do that, weneed to respond quickly to the requests of portfolio companies anddevelop, propose, and help implement their growth scenarios.
In sales/marketing and capital/business alliance support, we willcontinue to provide support for business matching between portfolio
companies and large companies to increase the number of business
opportunities and closing rates.
In recruitment support, we will focus on C-level executives andengineers. In addition, we will provide support activities tailored to theorganizational phase of rapidly growing startups and resolve
challenges related to organization development, which are common
among startups.
In IPO support, our staff of certified public accountants and tax

accountants offer support for establishing systems and preparing for an
IPO to portfolio companies that are considering going public.
The challenges faced by portfolio companies are growing more andmore diverse each year, and it may not be possible for JAFCO alone
to help tackle them. For that reason, we must build an ecosystem tocirculate diverse knowledge and rules of thumb and create reproducible
success backed by the firm commitment of our team of professionals.
In addition to addressing the dilemmas and social issues faced bylarge companies that are looking to innovate, we support theirendeavors in new business creation by organizing conferences andcommunities and matching them with startups. We also aim to expand
the operation of our Career Academy targeting individuals who areinterested in startups, as part of our efforts to lay the foundation forincreasing public awareness of startups.

JAFCO INTEGRATED REPORT 2022

36

JAFCO Group’s
ValuesFUND
MANAGEMENT

Sueko Matsumoto
Corporate Officer

JAFCO

Financial
institutions

50%

18%

❷ Sueko Matsumoto, Corporate Officer in charge of Fund Management
and Administration❸ Hitoshi Sawamoto, Principal, Fund Management❷❸

Strengths and Strategies
Strengths

Strategies• Track record of high fund performance• Extensive network of over 300 fund investors• Thorough reporting and accountability to fund investors• Strengthen relationships of trust with existing fund investors• Diversify the fund investor baseSocial Role (Value Creation and Track Record)

Contribute to perpetual growth by raising risk money as a pioneer in investment limited partnerships in Japan
Today, the form of investment known as an investment limited
partnership is utilized by many of Japan’s private equity investment
funds as an investment vehicle (linking assets and investors), but its
origin dates back to 1982, when the Company established the first
venture capital fund under Japanese law. As a pioneer in Japan’s
investment partnership business, we have led the establishment andexpansion of the risk money market by increasing fund size, while
coordinating with the relevant ministries and agencies to develop asystem for ensuring the credibility of fund management on behalf ofinvestors. Legislation on private equity investment management
operations set forth the requirements to allow pension contributions toinvestment funds, and after obtaining registration as a financial
instruments business operator in 2007 when the Financial Instruments
and Exchange Act entered force, we quickly established an operating
structure that allows us to better execute our fiduciary responsibility.
The social role of private equity investment funds is to raise riskmoney from a wide range of investors and allocate such money tocompanies that require growth capital and management support toincrease their corporate value, thereby revitalizing the economy andsociety. While the primary task of our division is to steadily raise riskmoney for new business creation as set forth in JAFCO’s Mission,
we can also deliver higher value by acting as an intermediary toorganically link investors and unlisted companies, thereby generating
business collaborations. Moreover, we can further increase the supplyof risk money by reusing returns. In summary, our division serves as a
hub for risk money, connecting dormant surplus capital held bycompanies and households with growing companies that serve society.
However, in part because risk money as a percentage of GDP is still
small in Japan relative to Europe, the United States, and other countries
in Asia, we believe that it is an important future responsibility of theCompany to further expand the domestic risk money market.

JAFCO INTEGRATED REPORT 2022

Financial
institutions

2%

45%

JAFCO

37%

Established in 2013

Established in 2016

SV6
Established in 2019

Fund size

Fund size

Fund size¥60.0 billion¥75.0 billion¥80.0 billion

March 2013–December 2024
(under management)

Financial institutions¥10.8 billion

Business firms, etc.

¥19.5 billion

JAFCO¥29.7 billion

JAFCO

Business firms, etc.

43%

Management
periodBreakdownof investors

22%

August 2016–December 2026
(under management)

Financial institutions¥24.3 billion

Business firms, etc.

¥18.3 billion

JAFCO¥32.4 billion

management reports.
The primary investors in our funds are financial institutions andbusiness firms. In addition to high expectations for management
performance, fund investors often take an interest in the businesses of
portfolio companies. As such, major functions of the Fund Management
Division include holding post-investment briefings on the businesses of
portfolio companies and matching investors with portfolio companies.
By serving as a reliable advisor to our fund investors, we identify needs
that even they are unaware of and match them with portfolio
companies. These efforts, in return, sometimes lead to business deals.

Business firms, etc.

16%

Management
periodBreakdownof investors

June 2019–December 2029
(currently making new investments)

Financial institutions¥36.2 billion

Business firms, etc.

¥14.7 billion

JAFCO¥29.1 billion

Receiving investment from a fund with diverse investors is also a big
plus for the businesses of portfolio companies. Having a point ofcontact with major corporations that have extensive business experience
helps portfolio companies to gain insights for reflection in their businessstrategies and to expand their sales channels, thereby accelerating
their growth.
The activities of our division serve as a bridge that brings fundinvestors, portfolio companies, and the Company together, which also
helps to create a process for increasing investment value.

Business Environment and Challenges

Our challenge is to develop a new investor base amid the stagnant IPO market
Monetary tightening since around the end of 2021 has largely put thebrakes on heated startup investment in the United States, and the trend
in investment by overseas institutional investors, which had been
flowing and expanding into the Japanese market, has changed.
Currently, the number of IPOs in Japan is on the decline, and theaverage market capitalization at IPO is also shrinking.
We conduct fundraising about once every three years, and the scaleis heavily influenced by the stock market and economic circumstancesat the time. As it takes several years to see results from the investment,a downturn in the stock market will not have an immediate negative

impact on fund performance. However, fund investors’ investment
decisions are impacted by the stock market as the performance ofexisting funds may slacken and our funds are long-term investment
products with low liquidity. The Fund Management Division closely
monitors these changes in the environment and strengthens relationships
with existing investors while continuing to approach new investors.
At present, about two-thirds of our fund investors are financial
institutions and about one-third are business firms. One of our futurechallenges is to cultivate institutional and other new investors.

Identify potential needs among financial institutions and business firms

Deepen relationships of mutual trust as a partner supporting portfolio companies

37

Breakdownof investors

32%

Other

Future Strategy

Emphases in Fund Management

Our responsibility is to do our best to maximize performance to meetthe expectations of our fund investors, who are our customers. In thecase of private equity investment funds, which have no portfolio at thetime of fundraising, investors make investment decisions based on theirassessment of the policy, strategy, and competence of the fundmanager. Because it takes several years to generate investment results,
fund investors are in the insecure position of having difficulty inManagement
periodFinancial
institutions

3%

SV5

32%

❶ Yoshinori Itoh, General Manager of Fund Management

Other

SV4

Business firms, etc.

❶

Corporate
Data

Breakdown of Fund Investors

In charge of Fund Management
and Administration

Message from the Division HeadBusiness Foundationfor Sustainable Growth

Sustainable
Growth Strategy

JAFCO Group’s
Value Creation

obtaining information on portfolio companies until specific results comeout. For that reason, we emphasize transparency and timeliness in ourmanagement reporting and create opportunities for face-to-facereporting whenever possible. Since the dawn of private equity
investment funds, we have worked to provide reporting to meet theneeds of fund investors. This commitment is behind our extensive
reporting that goes beyond the statutory financial statements and fundTo ensure a stable supply of risk money, we will work to maintain andimprove the trust relationships we have built with our existing investors,
including financial institutions and business firms, and further cultivate
new investors to increase diversity among our fund investors.
While our funds are already well understood by major financial
institutions, we will focus on enhancing relationships with small- andmedium-sized financial institutions, among whom recognition of ourfunds is still low, by providing thorough explanations. To enhance ourappeal to regional financial institutions, we will strengthen our

approach to startups with the potential to generate innovations that will
help revitalize regional economies.
As for business firms, we will strengthen our approach to not only
listed companies but also unlisted owner-operated companies withfinancial resources that are interested in investing in funds. Among
unlisted companies, some are considering investing in funds simply asa means of capital management while others hope to find startups thatcan provide them with insights for launching new businesses. We
intend to ensure that these needs are met.

JAFCO INTEGRATED REPORT 2022

38

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Global Investment
Tri-polar Structure of the Company Groupand Future Overseas Strategy

At the Company Group, investment teams in Japan, Asia, and the U.S.
operate their own funds based on their respective investment strategies.
We diversify regional risks by pursuing investment opportunities in three
regions: Japan, our home base of operations; fast-growing Asia; andthe United States, a leader in cutting-edge technologies.
The beginning of our overseas investment can be traced back to
1984, when we established a local subsidiary in the United States for
fundraising. We started by co-investing with local funds throughoverseas investors, and in 1986 we established a Japan-based unit
specializing in overseas investments.
Initially, the U.S. subsidiary worked together with the Overseas
Investment Division in Japan to make U.S. investments. After the historic

success of our IT fund in the United States around 2000, we switchedto managing funds in the same style as U.S. venture capital firms, withlocally hired teams making investment decisions. This policy of
entrusting fund management to make full use of the U.S. team’s
capabilities in venture investments, which are highly local in nature,
has been passed on to today’s Silicon Valley-based Icon Ventures.
In Asia, after establishing a joint venture with Nomura Securities in
1990, we started full-scale investment and expanded our investment
activities into Southeast Asia and East Asia. The joint venture wasdissolved in 1999, after which we shifted our investment focus totechnology startups in East Asia. As in the United States, our Asian
funds are managed primarily by local teams.

After 2000, we also established a dedicated business development
team in Japan to provide support to portfolio companies in Asia andthe United States for establishing Japanese subsidiaries, cultivating
sales channels, and forming capital and business alliances. Ourstrength in supporting these portfolio companies in entering theJapanese market has led to the acquisition of promising investment
opportunities in Asia and the United States.

Fiscal Year Ended March 31, 2022

Global balance of unlisted securities¥185.3 billion (236 cos.)
Japan

Asia

United States¥24.8 billion (54 cos.)¥50.3 billion (31 cos.)¥110.2 billion (151 cos.)
Venture: 137 cos.
Buyout: 14 cos.
Venture: 35 members
Buyout: 16 members
BD team: 13 members

Inv. team: 6 members

Inv. team: 10 members

Venture partners: 2

BD team: 2 members

BD team: 2 members

BD: Business Development
Number of personnel is as of April 1, 2022.
(BD team excludes members in charge of investment research and consulting).

JAFCO ASIA

Icon Ventures (United States)

Accelerating investment in cutting-edge domains within emerging markets in
multiple regions where rapid expansion is expected in the medium to long term

Executing investments in the world’s largest and most advanced startup market
and enhancing support for business development in Asia

Private equity markets in Asia, including Greater China (China
and Taiwan), which is the world’s second-largest economy, andIndia, where both population and economic growth areaccelerating, are large and attractive investment targets expected
to continue expanding. Numerous startups responsible fortransforming the social structure have emerged amid fierce
competition, owing in part to the high proportion of young
people in the population, absolute size of demand from the
middle-income consumer segment, and the latecomer’s advantage
in technology, that have led to the rapid development of social
infrastructure. In recent years, Southeast Asian countries such as
Vietnam and Indonesia have also increased their presence as
emerging markets with tremendous latent demand. JAFCO Asia
has remained consistently committed to the Asian market for the
past 30 years. As a local Asian venture capital firm with strong
ties to Japan, we are boldly promoting business development with

JAFCO Asia operating structure

Recognizing the growth potential in the United States—the largest
private equity market in the world—at an early stage, the Company
established JAFCO America Ventures Inc. in 1984. Since 2015,
our U.S. subsidiary has operated under the name Icon Ventures,and it is now known as a local venture capital firm with strength inSeries B and C funding rounds based on its network with top-tierventure capital firms in the United States. It is also promoting
independent management through coordination with JAFCO Groupin Japan, and now manages a cumulative total of US$1.3 billion
in funds. Since making the transition to its current operating
structure, it has successfully completed 34 exits, including eight
IPOs, for a total exit value of more than US$93 billion. Major
portfolio companies include Bill.com, Teledoc, Palo Alto Networks,
FireEye, Proofpoint, and Infinera, which all made successful IPOs,
as well as AsterData (acquired by Teradata), MoPub (acquired by
Twitter), and ClairMail (acquired by Monitise). Icon Ventures also
provides support to portfolio companies for their business

Regions/Industries of portfolio companies (monetary amount)

Sweeting Pan

Yoshiyuki Shibusawa

Managing Director,
Head of China(Shanghai, China)

President & CEO
JAFCO Investment(Asia Pacific) Ltd

John Lin

Melvin Teo

Managing Director,
Head of Taiwan

CFO

3.0%
5.8%
6.3%

27.9%

17.6%

3.6%
3.8%
6.2%
8.0%

14.3%

Icon Ventures operating structure
Joe Horowitz

Tom Mawhinney

Managing General Partner

General Partner

Jeb Miller

Preeti Rathi

General Partner

General Partner

Security

Consumer/SaaS

Data and AI

Digital health20.2%
n IT Services n Peripherals/Devices n Semiconductors
n Wireless/Telco Apps n Software/ASP
n Healthcare/Life Sciences n Materials n Other

Note: Since 2000, including JATF1–JAS8 and JTF (Taiwan fund).

Major portfolio companies

development in Asia in collaboration with Japan-based JAFCOGroup and for recruitment of engineers in Canada. These efforts
set Icon Ventures apart from its competitors and have helped it toacquire promising portfolio companies. Icon Ventures will continue
to put together a solid track record of investment in the UnitedStates with cloud and data services, consumer IT services, fintech,and digital health as priority investment domains.

Major portfolio companies

35.3%

8.7%

39.3%
n Taiwan n China n South Korea n Indian Singapore n Other

expertise in entering both the Asian and Japanese markets basedon independent investment decisions and a hands-on approach
to founders by our local professionals.
Since 2000, we have invested a cumulative total of US$1.3
billion in 300 companies through our Asian funds, of which morethan 200 companies achieved exits, including around 50 IPOs,
building a solid track record and investment management
capabilities with high reproducibility. Major exits include Medical
System’s listing on China’s onshore stock market (11.9x ROI) andSHEIN’s home-run deal (56.5x ROI). Going forward, we will
actively promote investments primarily in domains such as mobile
Internet, healthcare, and deep tech. In addition to Greater China,
where we have a proven track record with significant returns,
we also proactively pursue investments in India and Southeast Asia.

Exits
Supriya Singh
Director, Head of South Asia
Investments

Unicorns

Up-and-comers

39

JAFCO INTEGRATED REPORT 2022

JAFCO INTEGRATED REPORT 2022

40

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Human Resources Strategy
Messages from Human Resources Group Leaders
Basic Approach

At JAFCO Group, the most important management resource forrealizing Our Purpose and achieving sustainable growth is our humanresources. For 40 years, we have consistently hired new graduates
and worked to train investment professionals. Another major
distinguishing characteristic of our human resources strategy is theemphasis we place on the unique talents of individual professionals andthe organizational structure we have built to support those individuals.
A major challenge for the Company is to adapt flexibly to diverse

entrepreneurs/portfolio companies and markets while maintaining an
unchanging culture of respecting entrepreneurs and portfolio
companies throughout our organization. Toward that end, we support
employees in maximizing their performance and pursuing challenges
as a Co-Founder by respecting the diversity of our employees, providingthem with opportunities for individual growth and achievement, anddeveloping a work style that is conducive to productivity.

Carrying forward human resources that respect entrepreneurs
and a corporate culture that develops people

Diversity of Human Resources

The more diverse and complex social needs become, the greater thediversity required of investment professionals. Human resources withdiverse values and experiences who understand the value of theinvestment business are essential to quickly identify the social values ofthe future and create investment opportunities.
In addition to continually hiring new graduates, we also focus on
mid-career hiring to attract competent human resources regardless ofindustry experience. The percentage of mid-career hires among ourinvestment professionals is increasing each year, and the combinationof training new graduate hires and the expertise of mid-career hires
leads to the creation of additional investment opportunities.
While at present most of our investment team are male, we will stepup our efforts to hire female investment team members as we expand
our workforce. Our company-wide policy is to hire and train diverse
human resources regardless of gender, nationality, or age.

Mid-career hires among our investment professionals(venture and buyout investments)
(%)

41.3
33.3
22.0

2018/3

25.5

2019/3

Group Leader, HR Planning Group
Administration Division

27.9

2020/32021/32022/3

Improving the health of employees andperformance of the entire workplace

Human Resources Development

We have developed a unique training model for investment
professionals based on our many years of experience. We hirehigh-potential new graduates and train them to become strong
individuals capable of continuously producing strong results.
In recent years, in addition to on-the-job training, we have enhanced
our instructor and mentor programs to promote faster growth, while
also ensuring that their mental well-being is supported. Our young
employees regularly meet one on one with instructors and mentors,
as we work to create an environment that facilitates their growthand pursuits. Coaching and feedback training is also provided
to management-level employees to enhance their training ability.
We also encourage our employees to have second jobs. We
believe that promoting opportunities for our employees to take onchallenges and achieve personal growth, and sharing the experience
they gain outside the Company, both internally and with portfolio
companies, allows us to contribute to our own growth as well as thatof portfolio companies.

Well-being Initiatives

We believe that preparing an environment in which employees canwork comfortably and in good health leads to improvements inindividual performance.
Our health management initiatives include regular health checkups
and follow-ups, infection prevention measures, coordination withindustrial physicians and public health nurses, and regularannouncements designed to improve health literacy and awareness.
The uptake rate for health checkups is high, and that of stress checktests has reached 100%.

41

JAFCO INTEGRATED REPORT 2022

Yuichiro Araki

In addition to all operations related to the hiring of human resources, the HR Planning Group supports
on-boarding, training, and success of new recruits. We also promote strategies to maximizeorganizational performance.
In terms of hiring, we focus on high-potential new graduates and carry out a rigorous hiring
process based on multiple rounds of screening, while ensuring that graduates have a deep
understanding of venture investment and providing them with strong incentives.
We have a high retention rate of new graduates due to our unique tradition and culture ofdeveloping young talent into investment professionals. Leaders in the Venture Investment Division,
including partners, are composed of those with extensive experience who started their career at
JAFCO. This is a distinctive characteristic of our human resources, but we also actively carry out
mid-career hiring to diversify our human resources. In times such as these, when there are significant
changes in the social environment and values, diverse human resources with different values are
essential. To ensure the sustainable growth of the Company, we aim to create a fully diverse, highly
autonomous yet organically functioning organization through balanced hiring of carefully selected
high-potential new graduates and mid-career professionals.
In terms of human resources development, in addition to our high level of compliance awarenessand discipline as a professional firm, our major strengths are an organization-wide basic stance ofrespecting entrepreneurs/business leaders as well as a long-cultivated enthusiasm and a high senseof ownership for working closely with them and guiding their businesses to success. Furthermore,in the fund business domain, where individual strengths tend to be highlighted, we are committed tohuman resource and organizational development so that both individuals and the organization as awhole perform at their best.

Remote working is also spreading, and in addition to flexible
working hours through a flextime program, a flexible location work
style is possible depending on the situation, including hybrid home andoffice working. We also have support systems in place for the lifestyles
and life stages of each employee, including for childcare and nursing
care, and the number of employees who take childcare leave for an
extended period is increasing, regardless of gender.

The HR Operations Group handles arrangements for each employee after they join the Company,
including benefits, social insurance, remuneration, and evaluation. We ensure the peace of mind of
every employee by supporting them through administrative procedures as necessary, ensuring a
comfortable work environment, and implementing measures to help them achieve their best
performance. JAFCO’s business has high social value in that it contributes to a more prosperous future
by directly supporting the growth and value creation of portfolio companies, which inspires our
employees to work enthusiastically and earnestly. However, given our perpetual quest to identify
portfolio companies and support their growth, it is vital to prevent employees from overexertingthemselves. As self-discipline and self-management are strongly required, we believe it is important toemphasize the mental and physical health of our employees and promote flexible work styles,
including remote working. Recently, awareness of health management has been rising among
employees, and we see employees working according to their own preferences.
As entrepreneurs and portfolio companies continually change in response to the demands of thetimes, we must also constantly adapt. As such, while continuing to hire new graduates, we are hiring
more mid-career professionals. On-boarding support, including training programs andcommunication measures, must also be devised to ensure that they quickly become accustomed totheir new environment and become a part of our core competence. In terms of the organization, it isimportant that we combine new graduate hires with mid-career professionals to ensure a balanced
personnel structure. The ideal organization is one in which both existing members and newcomers
from diverse backgrounds can leverage their respective experiences to boost synergy.

Noriko UchidaGroup Leader, HR Operations Group
Administration Division

JAFCO INTEGRATED REPORT 2022

42

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Message from an Independent Director
Following this chain of events, in November 2022 the Company

Supporting JAFCO’s

to introduce a framework for further developing expertise and foroutlines its capital efficiency improvement plan and growth strategy.

encouraging the growth of talented human resources with diverse

In particular, the policy emphasizes the need for improving capitalpotential and backgrounds.

efficiency and ROE as well as for contributing to the sustainability-transformation withdedication anddiverse skills
Shigeru Tamura

can thrive, fully supported within the Company. Moreover, it is essential

announced the Basic Policy for Enhancing Corporate Value, which

Improving external-facing communication is also extremelyoriented corporate management of portfolio companies. Furthermore,

important. Although JAFCO has in the past emphasized a corporate

I believe that it is critical that JAFCO strengthen its investment andculture of discipline in which action is valued over words, I believe

fundraising capabilities. Currently most of the partners have been withthat it must now “say and act.” By this, I mean that JAFCO must

the Company since they were hired straight out of college. However,actively communicate what it has achieved and what it is going to do

JAFCO needs to recruit new talent from outside the Company. Suchin the future. I myself and the other independent directors will alsotalent should include partner-level investment officers and fundraisingproactively seek opportunities for listening to shareholders andprofessionals capable of attracting risk money from global investors.

investors, and in our capacity as directors we hope to help the

JAFCO must change its mindset so that such mid-career newcomers

Company strengthen its communication.

Independent Director

What do you consider to be the skillset and strengths of JAFCO Group’s Board of Directors?

What has impressed you about JAFCO’s management team?

in Board discussions of matters that I am less familiar with. I also

outside perspective and to provide useful advice to the management

regularly attend important internal meetings as a full-time but

team. While JAFCO’s independent directors include an attorney-at-law,

independent member of the Board, and from time to time serve as aa certified public accountant, and experienced corporate executives,

coordinator among the independent directors.

all of us possess a wide range of abilities beyond our own fields. Koji

I would also like to mention that we independent directors are

Tanami, who is an attorney-at-law, provides not only legal advice but

strongly committed to improving JAFCO’s management. In comparison

was already recognized for its role in building the venture capital

points. The first is that the Company is not haphazard in exploring new

also expresses opinions from a broader perspective based on his

to other companies where I have served as an independent director,

industry in Japan, and as an established leader in the industry. Afterbusiness opportunities; it is committed to and focused on the investment

experience, including as a top government official. It seems to me that

I feel that we have many more opportunities for sharing and discussing

joining the Board, however, I learned for the first time that thebusiness where there is the potential to help create new industries

Kenichi Akiba, a full-time professor who teaches the latest

management matters together with and separate from full-time

Company had overcome numerous difficulties in the preceding years,

through the provision of risk money and business expertise todevelopments in accounting at one of Japan’s top professional

executives, beyond the scope of regular Board meetings, andsuch as the collapse of the dot-com bubble, the 2008 financial crisis,

entrepreneurs and challengers. The second is that the team maintains aaccounting schools, will on occasion see how academic theories

discussions often go beyond our individual professional fields.

and its separation from the Nomura Group. JAFCO has since shifted

high level of professionalism, ensuring that conflicts of interest among

apply to JAFCO’s actual business. Yoshie Kajihara offers specific andFurthermore, the Basic Policy for Enhancing Corporate Value wastoward a policy of “highly selective, intensive investment,” and has

stakeholders, to which the investment sector can be prone, never arise.

realistic advice based on her experience as an executive in charge offormulated on the basis of comprehensive and timely discussions with

reduced the number of companies in its portfolio so that it can work

In addition, they trust the independent directors and do not hesitate to

management planning and human resources at several startups andthe full cooperation of each independent director.

more closely with each one. In doing so, JAFCO has established aseek advice of any kind from us. Since we do not always know

listed public companies. I myself make a point of actively participating

solid structure for more stable investment performance. The current

everything that occurs on the business front lines, there are occasions

management team, including partners, who are responsible for making

when we participate in discussions without being fully aware of thefund investment decisions, are the very people who helped tide therelevant details. Nevertheless, in such cases, the team is careful toCompany over past adversities. Competent and sincere, its members

explain the reasoning and background of matters to the point where

are capable of leveraging their experience to achieve future growth.

we have gained a full understanding.

When I was appointed as an independent director in 2017, JAFCO

I evaluate JAFCO’s management team highly on the following two

What are JAFCO’s current issues, and what should be prioritized going forward?

43

One of the key roles of independent directors is to always maintain an

In April 2022, Keisuke Miyoshi was elected as the new President & CEO.
Can you outline the discussion and decision process?
We had been requesting a concrete CEO succession plan for several

outside, or a relatively young executive. It was definitely a top priority

years. While the previous president, Shinichi Fuki (currently theto choose someone who had a deep understanding of investment,

chairman), was only 60 years old in 2021 without any issues in terms

especially in the venture field, and who could carry out ongoingof mental and physical strength, he had reached his 12th year asreforms. Keisuke Miyoshi had consistently supported Shinichi Fuki in

In my opinion, JAFCO previously operated under the straightforward

of around 40% of the Company’s Nomura Research Institute, Ltd.

president. During his tenure he resolved many important issues such as

implementing reforms and had served for many years as the head ofbelief that the way to enhance corporate value was simply to improve(NRI) shareholdings, and decided to carry out share buybacks.

shifting toward highly selective, intensive investment, separating fromdomestic venture investment. He is a seasoned investment professional

fund performance. While this idea may be correct in theory,

JAFCO then launched internal projects to develop growth strategies

the Nomura Group, and introducing the quasi-partnership. As such, he

who holds the deep trust of employees, and understands theunfortunately, this did not lead to JAFCO receiving a necessarily fairand measures for enhancing corporate value. In August 2022, theprobably felt that it was the right time to pass the baton to a successor.

Company’s true value. We judged that he would lead the Company inevaluation in the stock market. Recognizing this as an issue to quickly

management team received a number of proposals from shareholders

In autumn 2021, the Nomination and Remuneration Committee, which

enhancing its corporate value, and the Nomination and Remuneration

address, we took part in intensive discussions of improvement

regarding the enhancement of corporate value, the content of whichis comprised of the president and the independent directors, began toCommittee was unanimous in recommending him as the newmeasures at Board meetings. In February 2021, the Board

substantially overlapped with the content covered in discussions at

discuss the timing and candidates for a successor. There were three

President & CEO.

established the new Policy on Shareholder Returns, initiated the sale

Board meetings.

potential choices of candidate: a current Board member, someone from

JAFCO INTEGRATED REPORT 2022

JAFCO INTEGRATED REPORT 2022

44

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Board of Directors
Directors

Experience and Expertise of Directors
The policy and procedure for selection of director candidates are stipulated in the Corporate Governance Policy of the Company as shown below.

ChairmanPresident & CEO(Representative Director)

Shinichi Fuki

Keisuke Miyoshi

Apr. 1985
Jun. 2003
Feb. 2005
Mar. 2007
Jan. 2010
Apr. 2022

Joined JAFCO
Director in charge of Investment Group II,
Kansai Branch and Planning & Administration, JAFCOManaging Director in charge of Finance, Investment Group II,
Kansai Branch and VA Department III, JAFCO
Executive Managing Director in charge of Finance, Structured Investment,
Kansai Branch and VA Department III, JAFCO
President & CEO (Representative Director)
Chairman, JAFCO (present)

Apr. 1993
Aug. 2011
Apr. 2013
Jun. 2015
Mar. 2018
Apr. 2022

Joined JAFCOGroup Officer of Investment Group II, JAFCO
Corporate Officer in charge of Investment, JAFCO
Director in charge of Investment, JAFCO
Director in charge of Investment, Partner, JAFCO
President & CEO, in charge of Investment, Partner, JAFCO (present)• Directors and corporate officers are appointed by the Board of Directors based on deliberations by the Nomination andRemuneration Committee.
• All directors (excluding directors serving as Board-Audit Committee members) are subject to election/reelection every year at theGeneral Meeting of Shareholders. The Board-Audit Committee expresses its opinion on directors’ appointment/dismissal at theGeneral Meeting of Shareholders when it deems it necessary.
• The Company shall select director candidates who have business skills, insight, experience, and expertise to serve as a director toallow the Board of Directors to fully exercise its operational and supervisory functions. The Company proactively selects suitable
candidates from diverse backgrounds regardless of gender and nationality.
• The Company shall select independent director candidates who have abundant experience and deep insight into corporate
management or specialist fields, and can be expected to fulfill the roles and responsibilities of an independent director. The selection
is in accordance with the Company’s Standards for Independence of Independent Directors.

Independent Directors

The experience and expertise required of directors comprising the Company’s Board of Directors, and the experience and expertise of the directors
appointed at the Annual General Meeting of Shareholders held on June 21, 2022, are outlined below.
Director(Board-Audit Committee
member, full-time)

Director(Board-Audit
Committee member)

Shigeru Tamura

Koji Tanami

Apr. 1985
Jun. 2000
Aug. 2000
Sep. 2002
Jun. 2003
Aug. 2005
Aug. 2006
Jun. 2010
Oct. 2014
Jun. 2017
Jun. 2019

Joined The Bank of Yokohama, Ltd.
General Manager of Business Administration and Head of Office of IPO,
Members Co., Ltd.
Director & CFO, Members Co., Ltd.
General Manager of the Business Management Headquarters (CFO),
Aplix Corporation
Vice President of Principal Investments, Investment Banking Headquarters,
ORIX Corporation
Senior Corporate Officer, Medical Industries Corp.
(currently MEDISCIENCE PLANNING INC.)
Executive Vice President, MIC Medical Corporation(currently MEDISCIENCE PLANNING INC.)
President & CEO, MIC Medical Corporation
Chairman, MIC Medical Corporation (until May 2015)
Director (Board-Audit Committee member), JAFCO
Director (Board-Audit Committee member, fulltime), JAFCO (present)

Apr. 1964
Jul. 1994
Jul. 1996
Jan. 1998
Sep. 1999
Jun. 2001
Oct. 2007
Sep. 2008
Dec. 2010
Jun. 2015

Joined the Ministry of FinanceDirector-General of the Financial Bureau, Ministry of Finance
Chief Cabinet Councilor for Internal Affairs, Cabinet Secretariat
Administrative Vice Minister, Ministry of FinanceSpecial Advisor to the Minister of Finance
Deputy Governor and Managing Director, Japan Bank for International Cooperation
Governor, Japan Bank for International Cooperation
Resigned from the position of Governor of Japan Bank for International Cooperation
Registered as Attorney-at-Law (Dai-ichi Tokyo Bar Association)
Attorney-at-Law, Hashidate Law Office (present)
Director (Board-Audit Committee member), JAFCO (present)

Experience/
Expertise

Expertise
Investment

Fundraising/
Fund operation

Overseas
operation

l

l

l

l

Keisuke Miyoshi

l

l

l

Shigeru TamurallCorporate
management

Shinichi Fuki

Director(Independent Director)

Koji Tanami(Independent Director)llPersonnel/
Labor affairs

Treasury
accounting

Legal affairs/
compliance

Finance

l

l

l

l

l

l

l

l

l

l

l

l

(Independent Director)

Yoshie Kajihara(Independent Director)

l

l

l

Kenichi Akibal

Academic
research/
education

l

l

l

l

Notes: 1. Expertise
Directors Shinichi Fuki and Keisuke Miyoshi have experience of management team member recruitment, management figure analysis, investment legal affairs, fundraising arrangement, etc. atunlisted companies through their venture investment operations. Therefore, even if they have not worked in the relevant divisions, they are deemed to have expertise in personnel/labor affairs,
treasury/accounting, and legal affairs.

Director(Board-Audit
Committee member)

Director(Board-Audit
Committee member)

Kenichi Akiba

Yoshie Kajihara

Sep. 1986
Jul. 1989
Sep. 2001
Apr. 2007
Jul. 2007
Sep. 2009
Jun. 2015
Jun. 2018

Joined Eiwa Audit Corporation (currently KPMG AZSA LLC)
Registered as a certified public accountant
Accounting Standards Board of Japan, seconded as Technical Manager
Accounting Standards Board of Japan, seconded as Technical Director(until Aug. 2009)
Partner, KPMG AZSA Corporation (currently KPMG AZSA LLC)
Professor, Waseda University Graduate School of Accountancy (present)
Director (Board-Audit Committee member), JAFCO (present)
Auditor of the Board (outside), Mitsui Sumitomo Insurance Co., Ltd. (present)

Oct. 2001
Mar. 2005
May 2007
Feb. 2008
Oct. 2009
Nov. 2013
Oct. 2016
Jan. 2017
Aug. 2017
Jul. 2018
Jun. 201945

JAFCO INTEGRATED REPORT 2022

General Manager of Accounting, Aplix Corporation
Corporate Officer and Head of Corporate Planning Office, Aplix Corporation (until
Mar. 2007)
Corporate Auditor (full-time), MIC Medical Corporation (currently MEDISCIENCEPLANNING INC.)
Resigned from the position of Corporate Auditor (full-time) of MIC Medical Corporation
Joined CCS Inc.
Executive Officer in charge of Corporate Planning, CCS Inc.
Resigned from the position of Executive Officer of CCS Inc.
Joined Interactive Solutions Corporation
Director and General Manager of Human Resources & Administrations, Interactive
Solutions Corporation
Resigned from the position of Director of Interactive Solutions Corporation
Director (Board-Audit Committee member), JAFCO (present)

2. The table above does not represent all the knowledge or experience of the directors.

Corporate Officers

Hiroaki Matsuda

In charge of Administration

Naoki SatoIn charge of Business Development

Sueko Matsumoto

In charge of Fund Management; Administration

In charge of Venture Investment

Partners

Atsushi Fujii

In charge of Venture Investment

Shozo Isaka

Tomotake Kitazawa

In charge of Venture Investment

Mizuki Takahara

Yutaro Saka

In charge of Venture Investment

General Manager of the West Japan Branch andin charge of Venture Investment

JAFCO INTEGRATED REPORT 2022

46

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Corporate Governance(Fiscal year ended March 31, 2022)

Basic Views on Corporate Governance

Organization form

Company with a board-audit committee

Chairperson of the Board1

Keisuke Miyoshi, President & CEO

The Company’s basic views on corporate governance are as outlined below. With an eye to increasing corporate value over the medium to long term,
the Company makes continuous efforts to enhance corporate governance.
Directors1• Build respectful relationships with stakeholders• Establish an appropriate supervising structure• Maintain transparency and fairness in decision making• Establish a corporate structure that ensures effective and swift business execution

Board ofDirectors
meetings

Corporate Governance Policy
Based on the above basic views, the Company has established the Corporate Governance Policy, which outlines its concrete corporate
governance measures.

• Corporate Governance Policy• Corporate Governance ReportMore information

More information

Number of directors[of which, Board-Audit
Committee members]

6 [4]Ratio of female directors

16.7%

Ratio ofindependent directors

66.7%

Term

1 year2

Number of meetings held

13

Director attendance rate

100%

Board-Audit Committee
member attendance rate

100%

Board-Audit
Committee
meetings

Nomination
andRemuneration
Committee(Appointment, dismissal)

100%

Number of meetings held

14

Attendance rate

100%

Number of members

5

Ratio ofindependent directors

80%

Number of meetings held

5

Attendance rate

100%
Ernst & Young ShinNihon LLC

2. Excludes directors serving as Board-Audit Committee members.

Main deliberation items at meetings of the Board of Directors (fiscal year ended March 31, 2022)• Appointment of directors, corporate officers, and partners• Annual securities report• Remuneration for directors, corporate officers, and partners• Expense budget, financial plan
• Fund strategy• Directors and officers liability insurance, indemnity agreements with directors• Portfolio status report• Approval of potential conflict-of-interest transactions by directors• Approval of JAFCO Group’s investment in venture investment deals(from the perspective of prevention of conflicts of interest)• Surplus dividend

General Meeting of Shareholders

Ratio ofindependent directors

1. Since April 2022.

• Acquisition and cancellation of treasury shares, stock split

The Company is a company with a board-audit committee, whereby the Board of Directors and the Board-Audit Committee make importantmanagement decisions and audit/supervise business execution by directors.

4

Accounting auditor(basic, extraordinary, and stock-related compensation)

Corporate Governance Structure

Number of members• Matters related to corporate governance• Convening of the General Meeting of Shareholders(Corporate Governance Code compliance, Corporate Governance Report,• Organizational reform

evaluation of the effectiveness of the Board of Directors)• Important personnel changes, bonuses• Verification of cross-shareholdings• Establishment and revision/abolition of rules• Risk management• Approval of financial statements(Appointment, dismissal)(Appointment, dismissal)

Business execution
Board of Directors
Directors (excluding directors serving as Board-Audit Committee members)

Nomination andRemuneration
Committee

Board-Audit Committee(Supervision)(Supervision)(Supervision)(Reporting)

Representative Director(Auditing)Governance Initiatives
For the Company, which operates a high-risk business of venture and buyout investments, it is extremely important to enhance management
governance and carry out fair and prompt decision-making. We have been upgrading governance in stages each year, focusing on “management
independence,” “ensuring good balance between shareholder returns and strong shareholders’ equity,” and “transition to a partnership model.”Our efforts continue to enhance governance.

(Cooperation)

Partners
Investment Committee

Divisions,
Subsidiaries(Internal auditing)Internal Audit
DivisionMar. 2016(Reporting)(Auditing of accounts)

Accounting auditor
Transition to a company with

Board-Audit Committee

As of March 31, 2022, the Board of Directors was composed of seven directors, including three internal

The Board-Audit Committee is composed of four independent directors and currently the full-time member isdirectors and four independent directors. On April 1, 2022, the number of internal directors wasserving as head of the committee. The committee audits the execution of duties by directors and prepareschanged to two, with independent directors continuing to be the majority. The Board of Directors is

audit reports. The Company has set out the Standards for Independence of Independent Directors tochaired by the President & CEO.

ensure that their independence is maintained. We elect independent directors who meet these standards.

Nomination and Remuneration Committee

Investment Committee

The Nomination and Remuneration Committee is composed of four independent directors and the President

Investment decisions are made by the Investment Committee comprising the President & CEO, partners,& CEO. To ensure transparency and objectivity of nominations and remuneration, important decisions

and others to allow quick decision-making. Directors who are Board-Audit Committee members also

regarding the nomination and remuneration of directors, corporate officers, partners, and representatives ofparticipate in the committee on an as-needed basis.

major subsidiaries are deliberated by the committee in advance. The Board of Directors discusses andMar. 2018

Basic policy on dividends
announced

Eliminated cross-shareholdings
with Nomura Group by buying
back all shares held by
Nomura Group

Independent directors accountfor more than one-third of
the Boarda board-audit committee

Board of Directors

Mar. 2017

Mar. 2020
Majority of Board of
Directors members are
independent directors
Nomination and Remuneration
Committee establishedMar. 2019

One female director appointed

Partnership model introduced

Mar. 2021
Sold NRI shareholdings
Shareholder Return Policy
announced, after which sharebuybacks (2 times) totaling¥50 billion were conducted

Mar. 2022
Director Keisuke Miyoshi
became the new president
after deliberations by
the Nomination andRemuneration Committee

makes decisions on nomination and remuneration based on deliberation by the committee.

47

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48

JAFCO Group’s
ValuesAppointment and Dismissal of Directors and Officers

JAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Evaluation of the Effectiveness of the Board of Directors

l Directors and corporate officers are appointed by the Board of Directors based on deliberations by the Nomination and Remuneration Committee.
l All directors (excluding directors serving as Board-Audit Committee members) are subject to election/reelection every year at the General Meetingof Shareholders. The Board-Audit Committee expresses its opinion on directors’ appointment/dismissal at the General Meeting of Shareholders
when it deems it necessary.
l The Company shall select director candidates who have business skills, insight, experience, and expertise to serve as a director to allow the Boardof Directors to fully exercise its operational and supervisory functions. The Company proactively selects suitable candidates from diverse
backgrounds regardless of gender and nationality.
l The Company shall select independent director candidates who have abundant experience and deep insight into corporate management or
specialist fields, and can be expected to fulfill the roles and responsibilities of an independent director. The selection is in accordance with theCompany’s Standards for Independence of Independent Directors.
l In the case where a director has caused the Company to incur a tremendous loss or operational problems by committing a wrongful act, or
violating laws, regulations, the Articles of Incorporation or the Company’s internal rules, or is no longer able to effectively execute duties due toother reasons, such director shall be subject to a dismissal proposal.
l A partner is nominated with consensus of all partners and appointed upon the approval of the Board of Directors after deliberations by the
Nomination and Remuneration Committee.
l In principle, a majority of the Board of Directors are independent directors, and the Board size shall be determined to allow high effectiveness interms of the Company’s scale and business. The Company strives to ensure diversity in terms of gender, nationality, career history, and age.

The Board of Directors analyzes and evaluates its effectiveness every
year and discloses a summary of the evaluation results.
The summary of the results of the evaluation of the effectiveness of
the Board of Directors for the fiscal year ended March 31, 2022 is
as follows:
The Board of Directors (“BOD”) evaluates the effectiveness of the
BOD on an annual basis. In the fiscal year ended March 31,
2022, BOD deliberations over items such as composition, operation,role, duties, etc. of the BOD were held as in previous years based onquestionnaires and interviews administered to all directors.
As the majority of the BOD consisted of independent directors, it
was confirmed that the BOD composition was appropriate in terms ofinternal-external balance and size to fulfill its function to supervise
business executions.
In the fiscal year ended March 31, 2022, the BOD deepened
mutual discussions further from a medium-to-long-term perspective,
which was an issue raised in the evaluation results for the fiscal year

ended March 31, 2021. In addition to the BOD meetings,
opportunities were provided for BOD members to allow active opinion
exchange and mutual discussions in a timely and appropriate manner.
Through such discussions, the BOD decided to introduce the stockcompensation plan, carried out share buybacks and cancellation oftreasury shares continuing from the previous year, and decided tochange the BOD structure from April 2022 onward (appointment of
new CEO and change of BOD composition). The evaluation
determined that further progress has been made in terms of theeffectiveness of the BOD.
As upcoming issues to be addressed, the need was confirmed tofurther enhance the effectiveness of the BOD under the new structure
after the aforementioned changes and continue to deepen discussions
with a medium-to-long-term perspective.
Based on the above results, it is evaluated that the effectiveness of
the BOD increased in general compared to the previous year.
We will continue to conduct effectiveness evaluations regularly andfurther increase the effectiveness of the BOD.

l The Company discloses major concurrent positions of directors in the Notice of Convocation of the Annual General Meeting of Shareholders every year.

Remuneration of Directors and Officers
Reasons for Appointment of Independent Directors

Name

Reasons for Appointment

Attendance in the fiscal year ended
March 31, 2022
Board ofBoard-Audit
Directors’ meetings Committee meetings

Mr. Tamura had been involved in the management of listed and unlisted companies as CEO, CFO, etc., and hasabundant experience and deep insight. He also has experience in financial and investment businesses as well asinternational operations. He has leveraged his achievements, insight, and knowledge to contribute to the Company’s

Shigeru Tamura important management decision-making while supervising the execution of its operations from an independent perspective
as the full-time Board-Audit Committee member. Also, he chairs the Nomination and Remuneration Committee and actively

13 out of 13(100%)

14 out of 14(100%)

13 out of 13(100%)

14 out of 14(100%)

contributes opinions at the committee meetings. Based on the above, the Company believes that he is capable ofappropriately performing his duties as an independent director serving as a Board-Audit Committee member.
Mr. Tanami has held various important positions at government agencies and international organizations, and has
extensive experience and insight in monetary, financial, tax, and international matters, as well as expertise in legal affairs
as an attorney-at-law. He has leveraged the above experience and insight to contribute to the Company’s important

Koji Tanami

management decision-making while supervising the execution of its operations from an independent perspective. He also
serves as a member of the Nomination and Remuneration Committee and actively contributes opinions at the committee
meetings. Based on the above, the Company believes that he is capable of appropriately performing his duties as anindependent director serving as a Board-Audit Committee member.
Mr. Akiba is a certified public accountant with extensive knowledge of international accounting systems and has
contributed to the development of accounting standards in Japan. He is also committed to research activities and humanresources development as a graduate school professor. He has leveraged his high level of expertise in financial accounting,

Kenichi Akiba

etc. to contribute to the Company’s important management decision-making while supervising the execution of its
operations from an independent perspective. He also serves as a member of the Nomination and Remuneration Committee

13 out of 13(100%)

14 out of 14(100%)

13 out of 13(100%)

14 out of 14(100%)

and actively contributes opinions at the committee meetings. Based on the above, the Company believes that he iscapable of appropriately performing his duties as an independent director serving as a Board-Audit Committee member.
Ms. Kajihara has served as an executive, mainly in charge of accounting and management planning, at listed andunlisted companies and has abundant experience and deep insight in these fields. She has leveraged her achievements,
insight, and knowledge to contribute to the Company’s important management decision-making while supervising the

Yoshie Kajihara execution of its operations from an independent perspective. She also serves as a member of the Nomination andRemuneration Committee and actively contributes opinions at the committee meetings. Based on the above, the Company

Basic approach to the remuneration of directors, etc.
• The levels and structure of remuneration shall be sufficient to attract,
retain, and motivate competent personnel for the realization of theCompany’s Purpose of “Fueling perpetual growth; investing in boldvisions” and its Mission to “Commit to new business creation andjointly shape the future.”• Remuneration shall motivate our directors, etc. to commit to anincrease in corporate value and the improvement of not only shortterm financial results, but also medium-to-long-term results.
• Given the Company’s business nature of being an investmentcompany managing funds investing in unlisted companies, theremuneration of directors, etc. executing Company business shallreflect fund management performance.
• With the aim of gaining stakeholders’ trust, the remuneration plan
shall be transparent, fair, and rationalized, determined through anappropriate and transparent process.
• The plan shall also be designed to prevent fraud and over-emphasis
on short-term performance.
Remuneration of directors(excluding Board-Audit Committee members)
The remuneration of directors (excluding Board-Audit Committee
members) is determined by the Board of Directors based on
deliberations by the Nomination and Remuneration Committee.
The monetary compensation of directors (excluding Board-Audit
Committee members) shall consist of basic compensation andextraordinary compensation. Part of basic compensation is linked to
the Company’s ordinary income and other business performance, andextraordinary compensation additionally takes into account fundperformance. In addition, from the perspective of improving theCompany’s corporate value in the medium to long term, stock-based
remuneration shall be paid to directors (excluding directors serving as
Board-Audit Committee members and independent directors).
As an investment company managing highly volatile venture andbuyout investment funds, the level of compensation shall reflect theamount of assets under management, the Company’s businessperformance as a result of asset management, and shareholder value,and be appropriate for securing highly capable human resources.
The maximum total amount of monetary compensation of directors(excluding directors serving as Board-Audit Committee members) shallbe within ¥600 million per annum (based on a resolution of the 43rd
Annual General Meeting of Shareholders held on June 16, 2015). The
number of directors (excluding directors serving as Board-Audit
Committee members) as of the end of the 43rd Annual General
Meeting of Shareholders was six.
As stock-based remuneration to be paid to directors (excluding
Board-Audit Committee members and independent directors), the total
amount of monetary claims for granting transfer-restricted shares(hereinafter referred to as “Restricted Stocks”) shall be no more than¥300 million per annum, and the total number of the Company’scommon shares to be issued or disposed of as transfer-restricted sharesshall be within 300,000 shares per year (based on a resolution of the50th Annual General Meeting of Shareholders held on June 21,2022). The number of directors (excluding directors serving as BoardAudit Committee members and independent directors) as of the end of
the 50th Annual General Meeting of Shareholders was two.

believes that she is capable of appropriately performing her duties as an independent director serving as a Board-Audit
Committee member.

49

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JAFCO INTEGRATED REPORT 2022

50

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Compliance
Outline of directors’ monetary compensation
Basic compensation (fixed)

Fixed monetary remuneration paid monthly, determined by importance of roles and responsible areas of each job position, years in service, etc.

Compliance Promotion System

Monetary remuneration paid monthly, determined once a year, in principle, by the Board of Directors on a scale of 1 to 5 by reflecting short-term

Basic compensation (performance-linked)

results based on the comparison of the Company’s profit levels (capital gains, net additions to investment loss reserves, ordinary income, etc.) and
its details for the preceding fiscal year with the past results. A standard percentage of performance-linked basic compensation to total basic
compensation is about 20%, and the relevant portion increases/decreases within a range of 30% based on the above 5-point scale.
The Board of Directors determines the year-on-year percentage change in the level of remuneration for each position based on the year-on-yearcomparison of ordinary income, core income (amount of management fees after subtracting SG&A expenses), unrealized gains, fundperformance, which is a major management index over the medium to long term, and total fund size. The amount is then determined by the Board

Extraordinary compensation(performance-linked)

of Directors by taking into account respective job responsibilities and the degree of contribution, and paid to each director once a year.
Extraordinary compensation may not be paid when the Company’s performance deteriorates sharply.

Stock-based remuneration
In order to provide incentives to continuously improve the corporate value of the Company and to further promote value sharing with shareholders,the Company shall pay remuneration in the form of granting transfer-restricted shares to directors (excluding directors serving as Board-Audit Committee
members and independent directors; hereinafter referred to as the “Eligible Directors”). The outline of the restricted-stock remuneration plan is as shown below.
Granting of transferrestricted shares

The Company shall grant transfer-restricted shares (hereinafter the “Allotted Shares”) in an amount determined by the Board of Directors of the Company based on a baseamount corresponding to the positions of the Eligible Directors and a comparison of the Company’s stock price growth rate and the TOPIX (Tokyo Stock Price Index) growthrate for a certain period of time prior to the grant.
Payment ratio against base amountAmount of stock-based remuneration

125%
Payment ratio

Against TOPIX growth rate =		==Base amountBase amount×
×

Payment ratio
Against TOPIX growth rate

(A + B) ÷ CD÷EA Average closing price of the Company’s common shares for the three months immediately preceding the month within which the allotment resolution date falls

75%

B Dividend per share for the previous fiscal year
C Average closing price of the Company’s common shares for the three months immediately preceding the month within which the date one year prior to
the allotment resolution date falls

75%
125%
Against TOPIX growth rate

D Average closing price of TOPIX for the three months immediately preceding the month within which the allotment resolution date falls
E Average closing price of TOPIX for the three months immediately preceding the month within which the date one year prior to the allotment resolution date falls

The number of the Allotted Shares granted to the Eligible Directors shall be no more than the maximum of 300,000 shares per year as approved at the 50th Annual
General Meeting of Shareholders held on June 21, 2022.

Transfer restriction
periodFrom the allotment date to the time of retirement or resignation from director or other position of the Company or its subsidiary, as determined in advance by theCompany’s Board of Directors. Provided, however, if the time immediately after such retirement or resignation is prior to the date after a lapse of three (3) months fromthe end of the fiscal year within which the date of the allotment of the Allotted Shares falls, the end of the Transfer Restriction Period may be adjusted to a reasonable extent.

Removal oftransfer restriction(1) On the condition that the Eligible Directors continue to hold their position as director or other position of the Company or its subsidiary, as determined in advance by
the Company’s Board of Directors, during a period of time determined in advance by the Company’s Board of Directors (the “Service Period”), the Company shallremove the Transfer Restriction as of the expiration of the Transfer Restriction Period. Provided, however, that: (a) if an Eligible Director retires or resigns from his or her
position as director or other position of the Company or its subsidiary, as determined in advance by the Company’s Board of Directors, before the expiration of theService Period for justifiable reasons; or (b) if an Eligible Director resigns or retires from his or her position as director or other position of the Company or its subsidiary,as determined in advance by the Company’s Board of Directors, for any reason other than justifiable reasons before the expiration of the Transfer Restriction Period,
the number of the Allotted Shares to be removed from Transfer Restriction and the timing of the removal of Transfer Restriction shall be reasonably adjusted as necessary
even after the expiration of the Service Period.
(2) If any matter relating to a merger agreement under which the Company becomes the disappearing company, or a contract of share exchange, a share transfer plan,or any other reorganization in which the Company becomes a wholly-owned subsidiary, is approved at a General Meeting of Shareholders of the Company(provided, however, that if the approval of such reorganization is not required by the General Meeting of Shareholders of the Company, the Board of Directors of theCompany) during the Transfer Restriction Period, the Company shall, by resolution of the Board of Directors of the Company, remove the Transfer Restriction withrespect to the number of Allotted Shares reasonably determined based on the period between the commencement date of the Transfer Restriction Period and theapproval date of such reorganization, etc., prior to the effective date of such reorganization, etc.

Acquisition of
the Allotted Shares
without consideration(1) The Company shall acquire, without consideration, the Allotted Shares, for which the Transfer Restriction has not been removed as of the time immediately after
the removal of the Transfer Restriction pursuant to the “Removal of transfer restriction” above, as a matter of course.
(2) If an Eligible Director resigns or retires from his or her position as director or other position of the Company or its subsidiary, as determined in advance by theCompany’s Board of Directors, before the expiration of the Service Period, the Company shall acquire the Allotted Shares without consideration as a matter of course,
unless there are reasonable grounds for the retirement or resignation such as the expiration of the term of office or the death of the Eligible Director.
(3) If the Board of Directors of the Company recognizes that an Eligible Director has violated laws, regulations, internal rules or the Allotment Agreement in any material
respect during the Transfer Restriction Period, or in the case of certain grounds set forth in the Allotment Agreement, the Company shall acquire, without consideration,
all of the Allotted Shares held by the Eligible Director at the relevant time as a matter of course.

Information related to JAFCO Group’s compliance is reported to theCompliance Officer, who supervises overall compliance initiatives. The
heads of each division are responsible for compliance in theirrespective divisions and promote daily compliance, the Administration
Division supports and manages compliance-related initiatives as thesupervising division, and the Internal Audit Division audits these
activities. In addition, the Administration Division disseminates
information concerning the enactment, revision, and abolition of laws
and regulations to directors, officers, and employees and holds

Initiatives to Prevent Improper Use of Public Funds
Clarification of the responsibility system
We have established the necessary matters with regard to the handlingof public research funds, etc., in accordance with the Guidelines forSupervision and Auditing of Public Research Funds at ResearchInstitutions (implementation standards) to ensure their proper
management and promote appropriate and smooth operation. Under
the President & CEO as the chief administrative officer, the director in
charge has been appointed as the supervising officer and the managerof the department handling competitive funds, etc., as the officer
responsible for compliance promotion.

In response to the global trend in the establishment and strengthening of bribery prevention systems, we have established the Basic Policy on Bribery
Prevention to address prevention of improper transactions.

Basic Policy on Bribery Prevention
1. Prohibition of bribery
The directors, officers, and employees of JAFCO Group Co., Ltd. and its

The Company Group shall accurately record payments made to public

any act of offering or accepting bribes prohibited by laws and regulations

officials, etc., and retain the records properly under the appropriateof each country, either directly or indirectly, with public officials, theirinternal control systems.

equivalents and persons of interest (hereinafter “public officials, etc.”) toacquire illicit gains in business or offer benefits to third parties.

Fixed compensation

5. Internal audit
The Company Group shall conduct periodic internal audits on theprevention in light of laws and regulations of each country, while building
Basic compensation(1/3)

4. Retention of payment records

group companies (hereinafter “the Company Group”) shall not engage inoperational status of the bribery prevention framework.

The Company Group shall establish internal rules related to bribery

Monetary compensation(Performancelinked portion)

Consultation and contact desks
We have established the following consultation and contact desks forappropriate use of public research funds, etc.
• Consultation desk regarding appropriate use and administrative
processing of public research funds, etc.
• Contact desk for reporting improper use, etc.

Initiatives to Prevent Bribery

2. Establishment and operation of a bribery prevention framework(Fixed portion)compliance training and seminars. In case of violation of laws,
regulations, internal rules, etc. or administrative incidents, information isreported to the Compliance Officer and the supervising division, andimmediate remedial measures are then examined and implemented totake steps to thoroughly prevent recurrence. Furthermore, we haveestablished the JAFCO Hotline as a whistleblowing system for reporting
compliance-related matters, which is connected to the Compliance
Officer, the Administration Division, and an independent director.

Extraordinary compensation

Stock-based remuneration

6. Disciplinary action

a framework to prevent bribery through establishment of a continuous

The Company Group shall take strict disciplinary actions based on themonitoring system and an internal whistleblowing system.

Rules of Employment in the event that a director, officer, or employee
violates this policy or internal rules related to bribery prevention.

3. Education and training
(1/3)

(1/3)
Performance-linked compensation

The Company Group shall provide periodic training to prevent its
directors, officers and employees from offering or accepting bribes andensure the effectiveness of the bribery prevention system.

Note: Fractions in parentheses are approximate.

51

JAFCO INTEGRATED REPORT 2022

JAFCO INTEGRATED REPORT 2022

52

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Risk Management
Risk Management System

Business Risks, Etc.

JAFCO Group considers risk management to be an importantmanagement issue and has established a system to ensure that
operations are conducted appropriately.
Our risk management rules define the management system inaccordance with the characteristics and importance of each risk.
The risks that we manage are classified into categories including
investment management risks, market risks, liquidity risks, compliancerisks, information management risks, systems risks, back-office risks, andother risks. After deciding the degree of impact of risk materialization,
each risk is assigned to departments in charge and managed.
The risk management system adopts the Three Lines of Defense
model: risk management by each department in charge (first line),monitoring by the compliance officer and Administration Division(second line), and monitoring by the Internal Audit Division (third line).
As a preventive measure, the Board of Directors and Board-Audit
Committee evaluate the effectiveness of risk management based on
management status reports. Investment Committee meetings andportfolio meetings are also held regularly to appropriately manage

investment management risks, market risks, liquidity risks, and humanresource risks, ensuring the enhancement of the risk management system.
Investment decisions are made after deliberation by the Investment
Committee, which is comprised of members including the President &CEO and partners. For making decisions, opinions of staff in charge ofinvestment evaluation are asked separately from the relevant investment
division. The status of unlisted portfolio companies is reported on aregular basis at Investment Committee meetings, portfolio meetings,
and fund evaluation meetings, which is then reflected in the evaluationof portfolio companies, while discussing appropriate responses toaddress issues.
To create a culture that ensures proper recognition and managementof risks as an organization, we have put in place a system for prompt
reporting and consultation by the relevant divisions in case risk
management concerns or issues arise. In addition, we have establishedthe JAFCO Hotline as a means to enable directors, officers, andemployees to directly report information on actions that violate or may
violate laws and regulations.

Economic situation

opportunities for exits (sale) through M&A and other means.
However, there is a possibility that capital gains may fluctuate significantly if the economy or the stock market becomesluggish, and regional risk diversification may not be so effective due to factors such as geopolitical risks or global pandemics.

Investment inunlisted securities

A growing percentage of investments by the Company Group and its funds are at the seed stage of business foundation andthe early stage of business startup.
The Company Group rigorously selects promising companies, boosts its shareholdings in each company by making large
investments, and increases management involvement in portfolio companies.
Because it is difficult to fully ascertain the potential of companies in the seed and early stages, it is possible that we missinvestment opportunities in companies with high potential and cannot generate signiﬁcant returns on investment.
In the case that the business of a portfolio company does not progress as initially planned, or its financial situation
deteriorates, there is the risk that all invested capital will be lost. Also, investment exits through IPO, trade sales to third parties,
M&A, etc. are not guaranteed. Furthermore, as unlisted securities by nature have considerably poor liquidity, their value may
be signiﬁcantly lower than expected if sold at the unlisted stage.

Specialized business

The Company Group conducts its business operations by concentrating management resources on the operation andmanagement of funds and investment in unlisted securities.
Since investment in unlisted securities is significantly affected by changes in the economy and the stock and IPO markets, thebusiness performance and financial situation of the Company Group may be negatively impacted should such changes arise.

Competition

In our main business of private equity investment, competition for investment deals in promising unlisted companies isintensifying among competing companies, including specialist venture capital and corporate venture capital programs ofbusiness firms. Due to this competitive environment, we may miss opportunities to invest in promising companies or fail togenerate sufficient capital gains depending on the terms of investment. As a result, fund performance as well as the Company
Group’s business performance and financial situation may be negatively impacted.

Fall in stock prices

Following the IPO of a portfolio company, we sell our shareholdings after considering factors such as trends in the stock
market, acquisition cost, shareholding balance, stock price, trading volume, and the fund’s term of contract.
Decline in the prices of listed shareholdings may negatively impact fund performance and the business performance andfinancial situation of the Company Group. In particular, the negative impact from a fall in stock prices may increase
substantially if the shareholding ratio of the Company Group or its funds is high.

Exchange rate
fluctuations

We invest in U.S. dollar-denominated investments in Asian and U.S. funds. Since there is a five- to 10-year time lag between
making capital contributions to a fund and receiving distributions, exchange rate fluctuations affect our business performance.
The funds managed by the Company Group make new investments over a period of around three years, and distributions fromOperations risks

Private equity
investment
Economic situation
Specializedbusiness
Competition /Loss of investment
opportunities

Market risks

Fall in stock prices
Exchange rate
fluctuation
Economic situation

Liquidity risks

Fundraising/fund operation
Sale of unlisted
securities

Human resource
risks

Compliance risks

Information
management risks

Systems risks

Back-office risks

New risks

Securing, training,
and retaining
talented humanresources

Violations of laws
and regulations
and the Articles ofIncorporation
Businessregulations,litigation
Dispatch of
directors andofficers to portfolio
companies(Damages andemployer’s liability)

Leakage ofbusiness partners’
important
information andpersonal
information

System outages,
malfunctions,virus/malware
infection,
unauthorizedaccess, etc.

Disclosure andnotification of
documents
Settling accounts
Portfolio
companies andfund investors
Related duties, etc.

Infectious diseases
Pandemics
Natural disasters
Reputation
Other(First line) Departments in charge

Checking/Monitoring

Investment / Structured Investment

Fund Management Division

Overseas subsidiaries (Asia and United States)(Second line) Administration Division

J-SOX

J-SOX
HR Planning /HR Operations

Management

Management

Asia

Management(system)Fund administration/
management

Relevant departmentsAsia

the sale of shares and sale proceeds are paid over the fund term (usually 10 years). As a result, the exchange rate risks for theacquisition and liquidation of foreign currency denominated assets are diversified over a given period. However, as it requires
several years for an investment in an unlisted company to achieve an exit, it is difficult to completely eliminate the effect of
exchange rate fluctuations.

Monitoring
Compliance Officer (Officer in charge of administration)
Administration Division(Third line) Internal Audit Division

Fundraising

Monitoring
Internal Audit Division

Investment Committee

Preventive measures

The investors in our funds are mainly institutional investors, such as financial institutions, for fund management purposes orbusiness firms that wish to approach startups.
We work to build trust with our fund investors and ensure transparency in our fund management by issuing regular reportson the status of fund management and arranging meetings and other types of communication as needed.
However, in the event that we are unable to raise sufficient funds from investors due to sluggish business performance ora deterioration in the fundraising environment resulting from the economic climate and other factors, our investment activity may
be impeded and our fund management fees may decrease, thereby negatively impacting the Company Group’s businessperformance and financial situation.

Meetings/Committees, etc.

Portfolio meetings / Fund evaluation meetings
Board-Audit Committee
Board of Directors
JAFCO Hotline System

Employees
Compliance Officer / Administration Division / Independent Director

53

receiving fund management fees and success fees, we invest our own capital in the funds to receive capital gains.
The Company Group diversifies regional risks by making investments in Japan, Asia and the United States. In addition, afund makes new investments over a period of around three years to diversify risk over a certain period of time. We also seek

Risk management system

Investment
management risks

The Company Group uses capital from the funds it manages and operates to invest in unlisted securities. In addition to

JAFCO INTEGRATED REPORT 2022

Management of
information

In order to manage the important information of business partners and personal information held by the Company Group,
we have improved our information management system by establishing various company rules, thoroughly disseminating
information to directors, officers, and employees, and strengthening the security of information systems.
However, in the event of an information leak due to unauthorized external access, or malicious actions or carelessness of
directors, officers, employees, or other relevant persons, the Company Group’s business performance and financial situation
may be negatively impacted by claims for damages, a loss of social credibility, or other factors.

JAFCO INTEGRATED REPORT 2022

54

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Environmental Initiatives
Legal regulations

The Company Group operates and manages funds and invests in unlisted stocks mainly in Japan, Asia, and the United States.
These activities are subject to the legal regulations of the respective country where they take place.
At the Company Group, the relevant divisions gather information and respond to legal regulations related to theiroperations. However, in some cases, the Company Group’s activities may be restricted by legal regulations and costs may risedue to the need to address these regulations.

Legal and otherviolations

At the Company Group, the heads of each division serve as a person responsible to promote daily compliance at theirrespective divisions. The Administration Division, as the controlling division, supports and manages compliance-related
initiatives. In the event of non-compliance with laws, regulations, internal rules, etc. or an administrative accident, information iscollected and reported to the Compliance Officer and the controlling division. Immediate remedial measures are thenexamined and implemented, and steps are taken to ensure recurrence prevention. In the event that the Company Group or its
directors, officers, or employees cause damage to portfolio companies, fund investors, or other third parties due to violationsof related laws and regulations or various contracts, breach of its duty of care as a fund manager, or operational errors or
misconduct, the Group may be held liable for compensating such damage. Furthermore, the loss of social credibility andadministrative sanctions by the supervising authorities in response to such legal violations, etc. could adversely impact theCompany Group’s performance and financial position.

Executive dispatch

Securing andtraining of talented
human resources

Impact of
the COVID-19
pandemic

ESG

The Company Group may dispatch its directors, officers, or employees to serve as executives at a portfolio company toimprove the value of the portfolio company. In the event that a claim for damages is filed against such individual director,
officer, or employee, the resulting economic loss, employer’s liability, or loss of social credibility could adversely impact theCompany Group’s performance and financial position. In addition, to the extent possible, the Group takes out directors’ andofficers’ liability insurance and signs liability limitation agreements with portfolio companies, but it may not be able tocompletely avoid an adverse impact on the Company Group’s performance and financial position.
Due to the nature of its business, the future growth and success of the Company Group is heavily dependent on talented
investment professionals and other human resources. We have continued to recruit new graduates, while actively hiring
mid-career professionals, in an effort to secure and develop diverse, high-potential human resources.
However, if we are unable to secure high-potential human resources, the Company Group’s future growth, performance,
and financial position could be adversely affected.
The Company Group has worked to prevent the spread of COVID-19, prioritizing the health and safety of our directors,
officers, employees, and customers.
In anticipation of a prolonged pandemic, we worked with portfolio companies to raise funds for their businesses, reduce
costs, and conduct fundamental reviews of their profit plans.
In addition, we ourselves seek to maintain our net cash and deposits and equity capital at levels that do not particularly
hinder our medium-to-long-term business operations or investment activities.
However, in the event that the impact of COVID-19 lingers due to the emergence and spread of new variants, there arerisks that investment loss reserves may increase and IPOs, M&As, and other exits of portfolio companies may slow down.
Furthermore, it may also cause delays in future fundraising and other negative impacts.
The environmental, social, and governance (ESG) perspective has become increasingly important in corporate management
and investment activities, and JAFCO Group is also required to continuously address these initiatives.
Established in May 2022, the Project Promotion Division mainly promotes the Company’s sustainability projects and works
to specifically incorporate sustainability concepts into the Company’s business strategy.
However, if these efforts are not fully effective and the Company Group’s ESG investments and efforts to achievesustainability were considered to be weak, we could lose the support of our stakeholders, which could, in turn, have anegative impact on our fundraising and investment activities and our ability to secure human capital.
We will also work to gather and analyze necessary data on the impact of risks and revenue opportunities related to climatechange, one of the key global issues, on our own business activities and earnings, and strive to ensure appropriate information
disclosure as a listed company. However, if such disclosures were deemed insufficient, it could damage the Company Group’s
corporate value and negatively impact the Company Group’s performance and financial position.

55

JAFCO INTEGRATED REPORT 2022

Recognizing that environmental problems are major social issues, JAFCO Group works to reduce its own environmental impact and, through its main
business of investment, contribute to reducing environmental impact by supporting the establishment and development of companies with technologies
and business models that contribute to the environment.

Reducing our own environmental impact
1. Initiatives to reduce energy consumption
JAFCO Group is working to reduce energy consumption throughefficient office operations and active promotion of remote working.
As a result, we reduced our overall electricity consumption by 53.8%
and the greenhouse gas emissions associated with office electricity
and air conditioning by 56.2%, compared to the fiscal year ended
March 31, 2018.

2. Reduction of office paper
In February 2018, we moved our headquarters to Toranomon Hills(Minato Ward, Tokyo) and introduced a free address system. We havemade thorough efforts to reduce paper usage by discontinuing the
distribution of paper-based materials for internal meetings and thestorage of paper documents, and other means. This has resulted in a
63.1% reduction in the number of sheets of copy paper ordered,compared to the fiscal year ended March 31, 2018.

Office electricity consumption / Greenhouse gas emissions associatedwith office electricity and air conditioning

Sheets of copy paper ordered(Thousand sheets)

142.7

223.5
171.0

167.6

78.4

144.5
72.3

88.2

64.7

91.4
2018/3

2019/3

Greenhouse gas emissions (t-CO2)

56.9

2020/32021/3

62.7
60.0

77.5

2022/3

2018/3

2019/32020/32021/382.5

2022/3

Electricity consumption (Thousand kWh)

Notes: 1. Figures are for the Tokyo Head Office and the West Japan Branch (formerly Kansai Branch until August 2021) only. The former Chubu and Kyushu branches are not included.
2. The Company will work to disclose the impact of risks and profit-earning opportunities stemming from climate change on its business activities and profits in accordance with the Task Force on
Climate-related Financial Disclosure (TCFD) framework or similar.

Reducing environmental impact through the businesses of portfolio companies
Our main business of investment creates new businesses, and our investment activities themselves contribute to sustainability. We are strengthening ourinvestment in businesses and companies with the potential to contribute to the realization of a sustainable society through technologies and services
that offer solutions to environmental problems, about which there is recent increasing concern.
Investment example 1

Investment example 2

Kyoto Fusioneering Ltd.

Power Spin Inc.

The company is a Kyoto University-originated startup focusing on thedevelopment of specialized plant equipment for nuclear fusion.
Nuclear fusion, which is the source of the sun’s energy, has the power
to supply energy for human beings for millions of years into the future if
it can be harnessed on earth. As nuclear fusion enables fuel to becreated from seawater and does not emit greenhouse gases, it isexpected to provide a fundamental solution for energy andenvironmental problems.

Power Spin is a Tohoku University-originated venture focusing on circuit
IP and design for IoT devices and AI systems using spintronics technology
to increase the ratio of computing performance to energy consumption
by a factor of 100 or more compared to conventional technologies.
Because spintronics can achieve sufficient computing power withdramatically lower energy consumption, it solves the electricity
consumption issues of semiconductors and contributes to the realizationof both a carbon-neutral, energy-saving society and a livable societythat harnesses AI, IoT, and DX (Society 5.0).

JAFCO INTEGRATED REPORT 2022

56

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Review and Analysis of the Fiscal Year Ended March 31, 2022
As the SV6 Fund Series, which was established in 2019, isBusiness Progress and Results

scheduled to complete new investment activity as initially planned by

Fund management fees / Success fees(¥ billion)

7.4

the end of the fiscal year ending March 31, 2023, due to steady

6.2

progress in investment, the establishment of a new fund* is currently
Investment loss reserves

Changes in the business environment and impact on
portfolio companies

In the fiscal year ended March 31, 2022, additions to investment loss

Against the backdrop of changes in U.S. monetary policy, geopoliticalreserves, which had risen in previous years due to such factors as therisks, and rising crude oil prices, the stock market has entered a major

COVID-19 pandemic, fell sharply to ¥1.1 billion (from ¥3.5 billion incorrection phase with increasing uncertainty. The impact of these

the previous year) as the COVID-19 impact was limited. The reserve(¥ billion)

factors on the private equity market also needs to be closely monitored

balance also fell to ¥9.0 billion (previous year ¥10.9 billion) as aas there has been a series of IPO postponements and scaling down inresult of a decrease in reserve additions and the progress in the sale ofthe domestic IPO market. Under these circumstances, we acknowledge

marked-down shares, including the liquidation of the SV3 Fund Series.

that the impact on the performance and fundraising of portfolio

Also, the reserve ratio was extremely low at 12.1% (previous year

companies is unpredictable.

17.3%) due to steady investment and the decrease in reserve

Financial highlights and capital gains for the fiscal year ended
March 31, 2022

situation remains unpredictable. If the performance and fundraising

During the fiscal year ended March 31, 2022, both net sales andactivity of portfolio companies are affected, investment loss reserves

ordinary income increased from the previous year, while profit

may increase again.

129.0

decrease in gains on the sale of investment securities from the previous

Additions to investment loss reserves and balance (JAFCO’s interests)

year. Capital gains totaled ¥12.6 billion on listed and unlisted shares(¥ billion)

73.9

year due mainly to the IPO by Visional, Inc. in April 2021.
Our primary management focus is to sustain high fund performance

2.2

number of IPOs achieved each year. Although business results fluctuatesignificantly from year to year depending on the number of large exits,
continuous improvement in performance of each operating fund allows(¥ billion)

2021/32022/3

Change21.5

27.7+28.7%Net sales
Ordinary income

11.7

18.4

+56.8%

Profit attributable to
JAFCO Group Co., Ltd.
stockholders

38.5

15.1

–60.8%

Ratio of reservesto the balance ofunlisted holdings (%)

63.1

55.1

49.8

47.7

exits from which large capital gains can be expected, regardless of the

us to maintain strong business results over the long term.

1.6

3.5
3.1

9.6

8.7

8.2

10.9

1.1
9.0

2018/3

2019/32020/32021/32022/3

20.1

17.4

14.9

17.3

12.1

Note: Amount subject to management fees does not include JAFCO’s interests in funds,
funds under extension, and Icon funds.

11.1

16.7

5.3

2.6
–4.0

–0.7

–2.3

4.4
7.6

3.1
12.6
–3.1

2018/3

2019/32020/32021/32022/3

9.9

6.4

7.1

14.9

12.5

Gains (Unlisted)

Losses (Unlisted)

Note: Gains/Losses include other portfolio-related revenues and impairment losses.

JAFCO INTEGRATED REPORT 2022

funds under extension, and Icon funds in the United States, which are
excluded from the scope of consolidation) rose slightly to ¥138.9
billion due to the establishment of the new Asian fund (JAS-8).

2.9

2018/3

2019/32020/32021/32022/3

133

134

131

132

135

Success fees

IPOs. First-price multiple at IPO was 13.5 times. We have reduced thenumber of new investments by continuing to pursue our highly selective,
intensive investment strategy. We will remain committed to maximizing
capital gains per deal, instead of increasing the number of IPOs. In
addition, we will diversify exits through such means as M&A and tradesales by increasing our shareholdings in portfolio companies.

Income from management fees, which is the core income of fundmanagement companies, increased slightly from the previous year.

JAFCO-backed domestic IPOs (including fund investors’ interests)

A rapid increase in fund size may cause deterioration in fund(¥ billion)(Companies)

7

32.8
5

market growth of promising investment targets, while firmly maintaining
our stance of highly selective, intensive investment. In addition to21.3

success fees from the SV3 Fund Series, success fees from the SV4 Fund

2

Series and JATF VI, whose distributions to investors have exceeded

Investment
multiple

3

38.4
4

12.1

2018/3

6.2
2019/32020/32021/32022/3

11.5x

7.9x

10.4x

14.7x

13.5x

respective total capital contributions, were steadily recorded.

First price-based capital gains

Number of IPOs

Notes: 1. One of the IPOs in the fiscal year ended March 31, 2021 was by a Taiwan-based
portfolio company on the TSE Mothers Market.
2. Market value at IPO is calculated by multiplying the first price with the number of shares
held by JAFCO prior to the IPO.
3. The fiscal year ended March 31, 2022 excludes an IPO (Kibun Foods Inc.) from ourinvestment securities portfolio.

Asia made a final close. As the SV3 Fund Series (established in 2007;

subject to management fees (excluding JAFCO’s interests in funds,

57

Amount subject to management fees

During the fiscal year ended March 31, 2022, a fund established in¥332.3 billion (from ¥451.5 billion in the previous year). The amount

Gains, net (Listed)

21.9

Fund commitments(¥ billion)

Unrealized gains(¥ billion)

23.6

2.9

During the fiscal year ended March 31, 2022, there were four domestic

Note: Excluding investment in other funds.

2021 after a period of extension, total commitments decreased to

–4.4

83.7

2.6

IPOs

Balance of unlisted holdings
Reserve balance
Additions to investment loss reserves

total commitments of ¥146.5 billion) was liquidated in December

11.3

2022/3

2.5

Note: All figures reflect the exclusion of the U.S. subsidiary (JAV) from the scope of consolidation.

performance. The size of our future funds will be set in line with theCapital gains (JAFCO’s interests)

6.8

2021/3

Income from fund management(¥11.3 billion in the previous year), exceeding the level of the previous

over the long term. We will continue to pursue IPO, M&A and other

138.9

132.0

1.8

Fund management fees

2020/3

Total commitments

attributable to JAFCO Group Co., Ltd. stockholders fell as a result of aNo. of employees(consolidated basis)

451.5
332.3

Newly raised(¥ billion)

0.8

4.5

3.6

2.6

2.5

433.9

additions. Nevertheless, we continue to closely monitor the impact of
the aforementioned changes on the private equity market as the

2.4* The JAFCO SV7 Fund Series was established in June 2022.

Fund commitments

5.3

4.9

being planned.

(Reference) JAFCO-backed IPOs during the fiscal year ended March 31, 2022
Visional, Inc.
HR tech platform; HR SaaS; business succession-related M&A; SaaS marketing;cyber security; logistics DX platform

IPO date: Apr. 22, 2021
IPO market: Mothers (currently Growth)
Head office: Tokyo, Japan

WonderPlanet Inc.
Entertainment services

IPO date: June 10, 2021
IPO market: Mothers (currently Growth)
Head office: Aichi Prefecture, Japan

Photosynth inc.
Development and supply of cloud-based IoT services including Akerun,an access control system

IPO date: Nov. 5, 2021
IPO market: Mothers (currently Growth)
Head office: Tokyo, Japan

Finatext Holdings Ltd.
Development and operation of tech-driven wealth management service

IPO date: Dec. 22, 2021
IPO market: Mothers (currently Growth)
Head office: Tokyo, Japan

PLAYSTUDIOS, Inc.
Development and operation of casual games for mobile and social platforms

IPO date: June 22, 2021
IPO market: Nasdaq
Head office: U.S.

Confluent, Inc.
Event streaming platform service

IPO date: June 24, 2021
IPO market: Nasdaq
Head office: U.S.
JAFCO INTEGRATED REPORT 2022

58

JAFCO Group’s
ValuesInvestment
Total investment amount in each region varies each fiscal year. During
the fiscal year ended March 31, 2022, the global investment amount
totaled ¥37.1 billion. In particular, domestic venture investment,
including follow-on investment, progressed at a higher pace than theprevious year, as portfolio companies’ fundraising also increased.
In the fiscal year ended March 31, 2022, the ratio of IT-relatedcompanies in our domestic venture investment portfolio increased,
including a number of startups with the potential to change businessmodels of existing industries through the latest technologies. There was

Corporate
Data

Investment balance and unrealized gains

Status of assets

As new and follow-on investments increased steadily, our share of the

The majority of portfolio companies are unlisted, whose shares have noServices, etc.

investment balance from fund investment activity rose. There were four

market value and liquidity is extremely limited. We need to maintain adomestic IPOs and two overseas IPOs in the fiscal year ended Marchsolid financial base to allow us to continue investing in any operating

31, 2022, and the partial sale of our shareholdings is underway.

environment. As of March 31, 2022, net assets stood at ¥197.4

Electronics

4%

8%

Manufacturing

Software1%

4%

Medical/Biotech¥19.3 billion

7%

Unrealized capital gains on listed portfolio shares stood at ¥12.5

billion and the equity ratio was 84.7%. Among balance sheet items,

billion, down ¥2.3 billion from the previous year due to the sale ofcash and deposits were ¥52.6 billion, including JAFCO’s contributions

such shares and lower prices of some shares. Further sale of suchto funds.
Based on the Policy on Shareholder Returns established in theshares will result in realized capital gains.

previous fiscal year, we will secure the necessary funds to provide foredge technology for the next generation in fields such as electronics,

IT Services

medical care, and biotech.

Balance of operational investment securities (JAFCO’s interests)

uncalled commitments and planned commitments to future funds with(¥ billion)

the aim of continuing to invest under any circumstances, while also
considering returning a certain portion in excess of the necessary funds

76%

Broken down by growth stage at the time of new investment,
early stage, when starting up the business, accounted for most of new

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Breakdown of investments by sector (new and follow-on investment inJapan; including fund investors’ interests)

also a rise in portfolio companies with businesses based on cutting-companies at the seed stage, when the business is founded, and the

JAFCO Group’s
Value Creation

14.3

Note: Overseas life science investments (carried out by the Venture Investment Division in Japan)
and buyout investments are excluded.

to shareholders. We will continue to ensure a good balance between
continuous shareholder returns and aggressive investment firmly in line

16.4

with our investment policy.

8.5

investments, the majority of which are in the internet space. The speedof business launch greatly affects the change rate of startups, while alarge number of competitors means a delay in the business launch may
take a toll. As a Co-Founder, we will offer deep management
involvement from the business conception stage and commit to business

Breakdown of investments by stage (new investment in Japan;
including fund investors’ interests)

55.1

63.1

262.4

2020/3
Unlisted

Total amount of private equity investments under management¥10.0 billion

Since changing our investment strategy from diverse investment to2021/3as a result of which the amount invested per company increased. The

Early 70%

total balance of investments in unlisted companies continues to trend(¥ billion)

7.1
5.1
5.9

12.2

2018/3
Japan: Venture

25.1
10.8

1.5
5.7

32.8
7.6

Note: Overseas life science investments (carried out by the Venture Investment Division in Japan)
and buyout investments are excluded.

3.7

7.8

Japan: Buyout

170.6
124.4
100.9

12.5

9.0

2019/3(¥ billion)

3.9

19.3

19.2

48.2

2020/32021/3

Asia

United States

2022/32021/32022/3Equity ratio
(%)

84.8

82.0

84.7

Total assets

Net assets

7.1

Operating assets of private equity investments (including fundinvestors’ interests)（未上場投資残高、運用資産の推移ファンド含む）

6.1

9.0
3.0
2.3

197.4

2020/3

14.9
12.5(¥ billion)

8.4

233.0

Listedupward in terms of both acquisition cost and fair value.

30.2

188.4

2022/3

215.2

Unrealized gains/losses on listed securities (JAFCO’s interests)

highly selective, intensive investment, our portfolio has been reshuffled,

37.1(¥ billion)

222.1
Seed 28%

34.8

Change in total assets and net assets (JAFCO’s interests)

Middle 2%

growth with entrepreneurs.

Investment activity (including fund investors’ interests)

73.9

135.9
114.0
57.1

148.3

185.3
164.9

142.8

125.7

Unrealized gains

2021/32022/3

Unrealized losses

67.3
60.1

54.5
97.6

56.9

71.3

82.7

52.7

120

125

126

142

151

2018/3

2019/32020/32021/32022/3

Domestic: Fair value (after markdowns)
Total: Acquisition cost basis–0.2
2020/3

Overseas: Fair value (after markdowns)

No. of companies (domestic)

Note: Exchange rate: US$1 = ¥122.39 for all periods.

59

JAFCO INTEGRATED REPORT 2022

JAFCO INTEGRATED REPORT 2022

60

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Financial and Non-Financial Highlights
Financial Highlights
Net sales /Gross profit margin(¥ billion)

29.5
65.5

(%)

25.9
59.6

Profit attributable to JAFCO Group Co., Ltd.
stockholders / Earnings per share

Operating income /Operating margin

29.9(¥ billion)

(%)

27.7
21.5

61.8

68.4

14.3
48.4

73.5

(¥)

61.0

50.1

9.0

47.3

416.5

24.2
229.0
10.2

41.7

(¥)

(%)

15.1

11.8

2018/3 2019/3 2020/3 2021/3 2022/3

2018/3 2019/3 2020/3 2021/3 2022/3

192.5
109.5 127.6
2018/3 2019/3 2020/3 2021/3 2022/3

Net sales
Gross profit margin

Operating income
Operating margin

Profit attributable to JAFCO Group Co., Ltd. stockholders
Earnings per share
Note: Figures have been adjusted to reflect a 3-for-1 stock split
conducted in the fiscal year ended March 31, 2022.

35.67

37.33

15.6

34.1

Equity capital /Equity ratio

Return on equity (ROE) /Return on assets (ROA)

38.5

16.9

15.0

12.2

(¥ billion)

Dividend per share /Dividend payout ratio

39.33
30.8

(%)

(¥ billion)

51.00

46.00

(%)

19.1
13.2

26.5

12.7

11.0

6.3

6.7

5.5

5.3

14.7

7.3

160.3

163.2

83.7

88.6

188.4
84.8

215.2

197.4

82.0

84.7

6.5

2018/3 2019/3 2020/3 2021/3 2022/3

2018/3 2019/3 2020/3 2021/3 2022/3

2018/3 2019/3 2020/3 2021/3 2022/3

Dividend per share
Dividend payout ratio

ROE
ROA

Equity capital
Equity ratio

Note: Figures have been adjusted to reflect a 3-for-1 stock split
conducted in the fiscal year ended March 31, 2022.

Notes: 1. ROE = Profit attributable to JAFCO Group Co., Ltd.
stockholders ÷ Shareholders’ equity (average of thecurrent and previous fiscal year-end) × 100
2. ROA = Profit attributable to JAFCO Group Co., Ltd.
stockholders ÷ Total assets × 100

Book value per share

Capital gains / Success fees /Fund management fees

Additions to investment loss reserves
and balance (JAFCO’s interests)

Domestic IPOs
(Including fund investors’ interests)(¥)(¥ billion)(¥ billion)(¥ billion)

1,727

1,759

2,030

2,439

2,769

2.4

2018/3 2019/3 2020/3 2021/3 2022/3

15.4

14.0

13.6

11.3

3.6

0.8 1.8

3.6 2.6

12.6

2.5 2.9

4.5
2.9

2018/3 2019/3 2020/3 2021/3 2022/3
Capital gains
Success fees

Fund management fees

49.8
47.7
2.2
1.6

73.9

(Companies)

7

32.8
5

21.3
1.1
9.0

10.9

3

2

(¥ billion)(Companies)

38.4

13.0

4

Investment amount by country/region(Including fund investors’ interests)

2

1

1

7.1
5.1
5.9

1
2.0

3.3

2018/3 2019/3 2020/3 2021/3 2022/3

0.0
2018/3 2019/3 2020/3 2021/3 2022/3

Ratio of reserves to the balance of unlisted holdings

Investment multiple

Investment multiple

8.2

8.7

17%

15%

17%

12%

11.5x

Balance of unlisted holdings
Reserve balance
Additions to investment loss reserves
Notes: 1. Other companies’ funds are excluded.
2. Of unlisted portfolio, CBs, warrants, etc. (bookvalue: ¥3.02 billion) are valued at market price(¥3.55 billion) from the fiscal year ended March
31, 2022, in accordance with the adoption of the
Accounting Standard for Fair Value Measurement.

Notes: 1. Figures are rounded to the nearest unit.
2. The U.S. subsidiary is excluded from the scope of consolidation from the fiscal year ended March 31, 2019.

7.9x

10.4x

14.7x

13.5x

First price-based capital gains
Number of IPOs (companies)

0.2

1.4x

0

—

15.7x

7.7x

12.2

34.8
25.1
10.8
3.0
2.3
9.0

8.4
1.5
5.7

32.8
7.6
3.7
9.0

19.2

12.5

37.1
7.8
6.1
3.9
19.3

2018/3 2019/3 2020/3 2021/3 2022/3
Japan: Venture
Japan: Buyout
Asia
United States

2.7x

Note: Overseas investments made by the Venture Investment
Division in Japan are included in the amount forJapan: Venture.

First price-based capital gains
Number of IPOs (companies)

Notes: 1. One of the IPOs in the fiscal year ended March 31,
2021 was by a Taiwan-based portfolio company
on the TSE Mothers Market.
2. Market value at IPO is calculated by multiplying thefirst price with the number of shares held by JAFCO
prior to the IPO.
3. The fiscal year ended March 31, 2022 excludes
an IPO (Kibun Foods Inc.) from our investment
securities portfolio.

(¥ billion)

30.2

12.1
6.2
2018/3 2019/3 2020/3 2021/3 2022/3

9.6

20%

Note: Figures have been adjusted to reflect a 3-for-1 stock split
conducted in the fiscal year ended March 31, 2022.

55.13.1

63.1
3.5

Overseas IPOs
(Including fund investors’ interests)

Notes: 1. Conversion: Exchange rate at the time of IPO.
2. Market value at IPO is calculated by multiplying thefirst price with the number of shares held by JAFCO
prior to the IPO.

Non-Financial Highlights
Environment

SocialGreenhouse gas emissions*(Scope 1 and 2)

Electricity consumption*

Number of employees by gender /Ratio of female employees (Non-consolidated basis)

Ratio of female managers(Non-consolidated basis)(t-CO2)(Thousand kWh)

(Persons)(Persons)

142.7

133.6

9.1

78.4

72.3

56.9

62.7
58.5
4.2

69.1

66.2

54.0

9.3

6.1

3.0

77
91.4

88.2

64.7

77.5

2018/3 2019/3 2020/3 2021/3 2022/3

Scope 1
Scope 2* Figures are for the Tokyo Head Office and the West Japan
Branch (formerly Kansai Branch until August 2021) only.
The former Chubu and Kyushu branches are not included.

JAFCO INTEGRATED REPORT 2022

(%)

57

167.6

2018/3 2019/3 2020/3 2021/3 2022/3

61

Governance* Figures are for the Tokyo Head Office and the West Japan
Branch (formerly Kansai Branch until August 2021) only.
The former Chubu and Kyushu branches are not included.

77
26.0
27

74
26.7
28

76

74
27.5

28.2

29.6

28

29

32

16.2

11

Ratio of independent directors
(%)

57

16.2

11

54

15.6

10

55

57
15.4

10

(Persons)

8
16.2

11

Ratio of female directors

3

37.5
5

(%)

7
3

7

7

7

57.1

57.1

57.1

42.9

4

4

4

4

3

3

3

(Persons)

8

0.0

(%)

7

0.0

7

7

7

1

1

1

14.3

14.3

14.3

6

6

6

2018/3 2019/3 2020/3 2021/3 2022/3

2018/3 2019/3 2020/3 2021/3 2022/3

2018/3 2019/3 2020/3 2021/3 2022/3

2018/3 2019/3 2020/3 2021/3 2022/3

Male employees
Female employees
Ratio of female employees

Number of male managers
Number of female managers
Ratio of female managers

Number of inside directors
Number of independent directors
Ratio of independent directors

Number of male directors
Number of female directors
Ratio of female directors

JAFCO INTEGRATED REPORT 2022

62

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

11-Year Summary(¥ million)
2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32022/32021/3Operating results
19,80422,07244,89061,945

41,15527,85729,47025,87829,85521,512

27,677

Revenue from operational investment securities

15,187

17,74438,49856,471

32,376

20,774

23,47023,291

23,697

16,164

20,257

Income from fund management

4,485

4,225

6,279

5,218

8,688

7,062

5,987

2,586

6,155

5,340

7,410

131

102

112

256

90

20

12

0

1

6

9

Operating income

2,086

8,007

27,302

38,41919,226

12,324

14,252

12,23914,9708,964

16,876

Operating margin (%)

10.5

36.3

60.8

62.0

46.7

44.2

48.4

47.3

50.1

41.7

61.0

Profit attributable to JAFCO Group Co., Ltd. stockholders

6,106

6,583

17,292

27,707

17,018

11,07324,235

10,162

11,83938,50415,080Net profit margin (%)

30.8

29.8

38.5

44.7

41.4

39.8

82.2

39.3

39.7

179.0

54.5

Cash flows from operating activities

6,859

8,476

30,153

28,822

12,788

15,117

7,425(1,350)12,177

8(12,958)

Cash flows from investing activities

15,971(4,623)2,550(5,744)

11,768(1,580)24,732213(277)

49,154748

Cash flows from financing activities(10,119)

6,816(18,442)(3,970)(14,092)(5,817)(69,046)(3,923)(3,581)(13,944)(43,474)

Cash and cash equivalents at end of period

41,02853,063

68,29089,89599,302

107,179

70,08663,87872,040107,51752,603

Total assets

135,810164,122

220,167

239,035

214,245

237,902

191,550

184,213

222,059

262,383

233,024

Net assets

98,303

112,535

159,347

188,125

189,501

207,855

160,299

163,215

188,366

215,237

197,390

Total commitments

433,803463,864

494,899

420,641

432,912434,772

348,506

359,103433,939

451,475

332,251

Balance of investment loss reserves1

19,701

18,843

18,78815,757

15,176

12,332

10,351

9,501

8,229

10,917

8,969

Return on equity (ROE) (%)

6.5

6.2

12.7

15.9

9.0

5.6

13.2

6.3

6.7

19.1

7.3

Return on assets (ROA) (%)

4.5

4.0

7.9

11.6

7.9

4.7

12.7

5.5

5.3

14.7

6.5

Equity ratio (%)

72.3

68.6

72.4

78.7

88.5

87.4

83.7

88.6

84.8

82.0

84.7

Dividend payout ratio (%)

18.2

16.8

6.4

16.0

26.1

40.1

15.6

34.1

30.8

11.0

26.5

Total investment balance

179,156

178,721

175,167

155,176

128,839

119,596

120,879

133,424

144,227

164,146

190,046

809

695

580

483

378

327

279

266

235

251

269

Earnings per share (EPS) (¥)

45.9

49.5

129.9

208.2

127.9

83.2

229.0

109.5

127.6

416.5

192.5

Book value per share (BPS) (¥)

738.0

845.4

1,197.2

1,413.4

1,423.7

1,561.6

1,727.5

1,758.9

2,030.0

2,438.7

2,769.2

Annual dividend per share (¥)

8.3

8.3

8.3

33.3

33.3

33.3

35.7

37.3

39.3

46.0

51.0

669.0

1,090.0

1,543.3

1,490.0

1,153.3

1,246.7

1,680.0

1,321.7938.7

2,193.3

1,875.0

Market capitalization2 (¥ billion)

890

1,451

2,054

1,983

1,535

1,659

1,559

1,226

871

1,936

1,337

Price earnings ratio (PER)

14.6

22.0

11.9

7.2

9.0

15.0

7.3

12.1

7.4

5.3

9.7

Price book-value ratio (PBR)

0.9

1.3

1.3

1.1

0.8

0.8

1.0

0.8

0.5

0.9

0.7

Japan

13,714/48

11,280/24

10,806/30

7,691/31

12,195/36

15,180/33

18,057/37

11,379/26

24,883/35

21,491/35

23,216/56

United States

5,317/25

6,636/17

5,400/19

10,005/21

5,008/10

3,938/12

7,101/19

10,753/19

8,425/24

7,637/18

7,775/16

Asia

3,623/23

2,588/18

4,667/19

3,947/19

4,236/16

1,786/10

5,063/11

3,014/11

1,459/12

3,684/13

6,060/21

Net sales

Other

Cash flows

Financial position

Major indicators

Number of existing portfolio companies
Per share information

Stock price indicesClosing stock price at fiscal year-end (¥)

Investment amounts / Number of companies by region

1. Balance of investment loss reserves: Other funds are excluded from the fiscal year ended March 31, 2020.
2. Market capitalization excludes treasury shares.
Notes: 1. The Company conducted a 3-for -1 stock split of common shares as of February 1, 2022. For the purposes of comparison, figures prior to the fiscal year ended March 31, 2022 have been retroactively adjusted.
2. The U.S. subsidiary is excluded from the scope of consolidation from the fiscal year ended March 31, 2019.

63

JAFCO INTEGRATED REPORT 2022

JAFCO INTEGRATED REPORT 2022

64

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Changes in Fund Performance
Performance of Main Funds in Operation

Fund Performance of Fully Liquidated Funds
As of March 31, 2022 (Preliminary basis)(¥ billion (Japan), US$ million (U.S./Asia))



Funds

Establishment

Commitments(total funds undermanagement)

Paid-in
capital(PI)

Total
distribution(D)

Fair value valuation (Japan: Reference value)
Remainingvaluation(R)

Net IRR(%)

Multiple(D + R)/PI

Previous year
multiple(2021/3)

Remainingvaluation(R)

Net IRR(%)

Multiple(D + R)/PI

Previous year
multiple(2021/3)

JAFCO SV4

Mar. 2013

60

1.00

1.46

0.91

17.6

2.36

—

0.34

13.0

1.79

1.80

JAFCO SV5

Aug. 2016

75

0.93

0.08

1.05

5.1

1.21

—

0.78

—

0.92

0.87

JAFCO SV6

June 2019

80

0.77

0.00

0.78

1.0

1.01

—

0.70

—

0.91

0.89

JATF VI

Mar. 2013

150

1.00

2.27

0.65

24.1

2.92

2.96

JATF VII

Apr. 2017

140

0.93

0.00

0.89

—

0.96

1.02

Asia

United States
Apr. 2006

108

0.96

1.37

0.01

6.4

1.34

1.34

Icon IV

Feb. 2010

150

1.00

2.45

0.53

12.0

2.58

2.67

Icon VMay 2012

260

0.99

0.47

0.94

6.0

1.34

1.09

Icon VI

Dec. 2015

375

0.85

0.07

1.35

15.4

1.54

1.15

Multiple

Net IRR

Paid-in capital (PI)Total distribution (D)

D/PI

(%)

1.6

1.00

3.26

3.26

16.7

July 1994

2.8

1.00

3.07

3.07

14.9

Mar. 1983

Mar. 1995

7.0

1.00

3.53

3.53

17.2

JAFCO No.4

June 1984

Dec. 1996

8.0

1.00

2.91

2.91

15.3

JAVP

Aug.1985

Sept. 1998

(US$ million) 37

1.00

4.08

4.08

24.7

JAFCO No.5

Dec. 1985

Sept. 1998

5.3

1.00

2.23

2.23

10.1

JAFCO No.6

Feb. 1989

Feb. 2001

5.5

1.00

1.00

1.00

—

JAFCO G-3

Jan. 1990

Jan. 2002

14.0

1.00

0.97

0.97

—

JAFCO G-4

Feb. 1990

Feb. 2002

10.5

1.00

0.98

0.98

—

JAFCO R1

Apr. 1991

Nov. 2003

11.4

1.00

1.10

1.10

1.2

JAVP2

Mar. 1992

Dec. 2003(US$ million) 68

1.00

1.17

1.17

3.2

JAFCO G-5

Jan. 1991

Mar. 2004

12.2

1.00

1.39

1.39

4.2

JAFCO R2

Apr. 1992

June 2004

5.2

1.00

1.46

1.46

4.4

JAFCO R3

Apr. 1995

June 2007

5.0

1.00

2.38

2.38

12.9

JAFCO G6

Apr. 1995

June 2007

9.0

1.00

2.13

2.13

10.9

JAFCO G7

Jan. 1997

Dec. 2008

12.2

1.00

1.55

1.55

6.2

JAFCO MBO1

Nov. 1999

Dec. 2009

28.0

1.00

1.17

1.17

4.0

JAFCO G8Mar. 2000

Dec. 2011

34.4

1.00

0.92

0.92

—

JAFCO G-9

Sept. 2002

Dec. 2014

23.0

1.00

1.06

1.06

0.9

JAFCO MBO2

Feb. 2004

Dec. 2014

50.0

0.92

1.09

1.18

5.0

JAFCO V-2

Sept. 2005

Dec. 2017

94.0

1.00

0.85

0.85

—

JAFCO V-1 (under liquidation)

Mar. 2004

Dec. 2016

53.7

1.00

0.89

0.89

—

JAFCO SV3

July 2007

Dec. 2021

146.5

1.00

1.70

1.70

10.3

Domestic funds

Establishment

End of term

JAFCO No.1

Apr. 1982

Dec. 1993

JAFCO No.2

July 1982

JAFCO No.3

Marked-down valuation

Japan

Icon II(¥ billion)

Notes: 1. Figures for U.S. and Asian funds are after annual audit based on GAAP (U.S.) and International Accounting Standards, respectively.
2. Marked-down valuation: Only markdowns are recorded, in principle. Markups are not recorded until the shares are sold or listed.
3. Net IRR of domestic funds are those of capital call funds of each domestic fund series.
4. Net IRR and multiples are calculated from the investors’ point of view based on actual date and amount of distribution, and residual net assets as of the date of calculation.
5. Total distribution of U.S. funds includes success fee equivalents, which are excluded when calculating net IRR and multiples.
6. Figures for paid-in capital, total distribution and remaining valuation are the ratio to commitments.
7. Figures are rounded to the nearest unit.

Fair Value Valuation

Fair value valuation is required under international standards such as IFRS and GAAP (U.S.) for investment securities held by venture capital and otherinvestment firms, and the International Private Equity and Venture Capital Valuation (IPEV) Guidelines have been used as the basis for the fair value
valuation of unlisted securities. For some time now, we have performed fair value valuation for our U.S. and Asian funds based on these standards.
For our domestic funds, in response to investors’ requests, we also conduct a fair value valuation of unlisted securities based on the IPEV
Guidelines. These figures are provided for reference purposes and are unaudited. This valuation differs significantly from the limited partnershipaccounting standards adopted by our funds as markups are also recorded for unlisted securities whose market valuation exceeds acquisition costs.
Valuations are conducted using key indicators—the terms of the latest round of financing, portfolio company performance, and the valuation
multiple of similar listed companies (multiple method). Certain conditions are also applied in accordance with the situation of portfolio companies.
Although valuations are calculated using a specialized platform (Qval*) after a careful examination of the available information, either most recent or
as of the reference date, we cannot guarantee complete accuracy. While we emphasize consistency in the conditions applied, differences may arise
due to changes in the situation of portfolio companies. This can have a substantial impact on the valuation of unlisted securities as a whole.
* Qval is a fair value valuation system for unlisted securities provided by S&P Global Market Intelligence. It is used by many venture capital and private equity funds, mainly in the United States.

Commitments(total funds undermanagement)

Against 1.0 in commitments(US$ million)
Commitments(total funds undermanagement)

Multiple

Net IRR

Paid-in capital (PI)Total distribution (D)

D/PI

(%)

113

1.00

2.67

2.67

12.7

Dec. 2018

150

0.97

1.58

1.65

13.6

Nov. 2000

Mar. 2012

178

0.95

0.94

0.99

—

JATF II (Asia)

Feb. 2004

Dec. 2014

100

1.00

1.33

1.33

6.7

JATF III (Asia)

Dec. 2005

Dec. 2017

168

1.00

1.16

1.16

4.1

JATF IV (Asia)

Aug. 2007

Sept. 2019

200

1.00

1.10

1.10

1.8

JATF V (Asia)

Jan. 2010

Dec. 2021

130

0.95

0.70

0.74

—

Overseas funds

Establishment

End of term

Icon (US)July 2003

Aug. 2020

Icon III (US)Aug. 2007

JATF I (Asia)

Against 1.0 in commitments

Notes: 1. Net IRR is calculated after subtracting management fees and success fees.
2. Figures are rounded to the nearest unit.
3. Total distribution of U.S. funds includes success fee equivalents, which are excluded when calculating net IRR and multiples.

65

JAFCO INTEGRATED REPORT 2022

JAFCO INTEGRATED REPORT 2022

66

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

ESG Data
Environment

Governance
Unit

Electricity consumption

2019/32020/32022/32021/3

Unit

t-CO2

142.7

78.4

72.3

56.9

62.7

Thousand kWh

167.6

91.4

88.2

64.7

77.5

s

Greenhouse gas emissions (Scope 1 and Scope 2)
Energy consumption

2018/3

2019/32020/3

3

3

3

5

4

3

3

3

Female

0

0

0

0

0

Independent

3

3

4

4

4

3

3

3

3

3

0

0

1

1

1

s

Employees

Number of employees (non-consolidated)
Male

Headcount

FemaleNumber of employees (consolidated)1
Male

Headcount

FemaleAverage years of service
Male

Years, months

FemaleAverage age
Male

Age

FemaleTurnover rate

2

Average annual working hours
Annual paid leave utilization rate
Remote working implementation rate

3

104

105

102

103

108

77

77

74

74

76

27

28

28

29

32

133

134

131

132

135

86

86

83

84

83

47

48

48

48

52

17 y, 3 m

17 y, 2 m

17 y, 4 m

17 y, 1 m

16 y, 3 m

15 y, 8 m

15 y, 11 m

16 y, 1 m

15 y, 11 m

15 y, 6 m

21 y, 10 m

20 y, 9 m

20 y, 9 m

20 y, 3 m

18 y, 1 m

43 y, 4 m

43 y, 10 m

44 y, 3 m

44 y, 3 m

44 y, 0 m

42 y, 3 m

42 y, 8 m

43 y, 1 m

43 y, 4 m

43 y, 5 m

46 y, 6 m

47 y, 3 m

47 y, 7 m

46 y, 6 m

45 y, 5 m

%

6.5

3.8

9.4

13.3

6.7

Hours

—

2,126

2,060

2,109

2,144

%

48.6

40.0

43.6

35.1

40.9

%

—

—

—

99.4

98.2

s

Recruitment / Diversity

Number of new hires (new graduates)

2
Male

Headcount

FemaleNumber of new hires (mid-career)
Male

Headcount

FemaleRatio of female employees among new hires(new graduates)%

Ratio of female employees
Front office(investment, branches, structured investment)%

Middle/back office (other than the above)
Ratio of female managers
Front office(investment, branches, structured investment)%

Middle/back office (other than the above)
Childcare leave utilization rate
Men

%

Women

0

2

4

1

1

0

2

2

1

1

0

0

2

0

2

6

2

13

11

2

4

1

11

6

0

2

1

2

5

50.0

0.0

0.0

50.0

0.0

26.0

26.7

27.5

28.2

29.6

8.0

6.4

9.3

11.9

10.9

42.6

43.1

40.7

39.3

43.5

16.2

16.2

15.6

15.4

16.2

9.7

10.0

10.3

10.3

9.4

s

21.6

21.1

20.0

19.4

22.2

66.7

0.0

0.0

0.0

25.0

0.0

0.0

0.0

0.0

25.0

100.0

0.0

0.0

0.0

0.0

7.4

5.1

10.1

10.1

13.8

2022/32021/3

4

Inside2022/32021/32020/3

5

Number of directors

Social2018/3

2019/3

Corporate governance

Male

Unit

2018/3

Male

Persons

Persons

FemaleAverage term of office for directors

Year

6.8

6.4

6.8

7.8

8.8

Number of Board of Directors meetings held

Times

14

13

13

14

13

Average attendance ratefor Board of Directors meetings

%

100%

100%

100%

100%

100%

Ratio of independent directors

%

37.5%

42.9%

57.1%

57.1%

57.1%

Ratio of female directors

%

0.0%

0.0%

14.3%

14.3%

14.3%

1

1

0

0

0

3

3

4

4

4

Number of Board-Audit Committee members
InsidePersons

Independent
Number of Board-Audit Committee
meetings held

Times

13

13

14

14

14

Average attendance ratefor Board-Audit Committee meetings

%

100%

100%

100%

100%

100%

—

5

5

5

5

—

2

1

1

1

—

3

4

4

4

Number of Nomination andRemuneration Committee members
InsidePersons

Independent
Number of Nomination andRemuneration Committee meetings held

Times

—

1

3

3

5

Attendance rate for Nomination andRemuneration Committee meetings

%

—

100%

100%

100%

100%

Basic compensation¥ million

130

90

91

90

90

Extraordinary compensation¥ million

127

89

89

84

92

Total

¥ million

257

179

180

175

183

Basic compensation¥ million

79

80

75

73

75

¥ million

51

51

68

73

75

Director remuneration(excludes directors serving
as Board-Audit Committee members)

Remuneration of directors serving
as Board-Audit Committee members

Human resources development

Average hours for training andhuman resources development

Hours/employee

Remuneration of independent directors4

Note: Figures are calculated on a non-consolidated basis unless marked with an asterisk.
1. Figures exclude the U.S. subsidiary.

Basic compensation

2. Including employees who retired at mandatory retirement age.
3. The percentage of employees who work from home at least once per month. Data collection began in October 2020. Prior data is not available.

67

JAFCO INTEGRATED REPORT 2022

4. The remuneration of independent directors is included in the remuneration of directors who are Board-Audit Committee members.

JAFCO INTEGRATED REPORT 2022

68

JAFCO Group’s
ValuesCompany Information (As of March 31, 2022)

JAFCO Group’s
Value Creation

Corporate
Data

Shareholder/Investor Information (As of March 31, 2022)

Company Profile

Stock Information

Trade name

JAFCO Group Co., Ltd. (JAFCO)

Authorized number of shares

240,000,000

Listed market

TSE Prime Market*

President & CEO

Keisuke Miyoshi (from April 2022)

Number of shares issued

80,910,000

Securities code

8595

Address of head office

Toranomon Hills Mori Tower 24F, 1-23-1 Toranomon, Minato-ku, Tokyo 105-6324, Japan

Number of shareholders

5,493

Administrator ofshareholders’ register

Mitsubishi UFJ Trustand Banking Corporation

Established

April 5, 1973

Fiscal year

April 1 to March 31 of the following year

Capital¥33,251 million* We transitioned to the Prime Market in April 2022 in conjunction with the restructuring ofmarket segments by the Tokyo Stock Exchange.

Number of employees

135 (consolidated), 108 (non-consolidated)

Financial instruments business operator

Director-General of Kanto Local Finance Bureau (Kinsho) No. 1693

Industry organization membershipJapan Investment Advisers Association

Shareholder Composition

Type II Financial Instruments Firms Association

Breakdown by shareholder category

Major shareholders

Individuals

Financial institutions(Including treasury shares)

25.46%

21.94%

Information Disclosure System
The Company publishes this Integrated Report with the aim ofcommunicating its value creation story that covers financial
and non-financial information. Moreover, to promote
communication with our stakeholders, we not only share theinformation in this report but also use various tools to

Fact Book
https://www.jafco.co.jp/english/ir/library/factbook/

Information disclosure media

Financialinformation

Non-financial
information

Integrated Report

Discloses the overall picture of our value creation for sustainable growth in an integrated
manner, providing a systematic explanation of our strategies and measures from bothfinancial and non-financial standpoints.

llFact Book

Published once a year independently of the Integrated Report and provides a summary of
the Company’s disclosure data, including the results of previous fiscal years andmanagement indicators.

lProvides an overview of the Company, the status of its business, financial information such as
financial statements, and non-financial information such as the corporate governancestructure, based on the Financial Instruments and Exchange Act.

lProvide quarterly financial information.

lSecurities Report

Financial summaries
and briefing materials

Corporate Governance Report

JAFCO Group website

12,83418.01

Custody Bank of Japan, Ltd. (Trust Account)

4,344

6.09
5.68

State Street Bank and Trust Company 505001

3,260

4.57

4.35%

State Street Bank and Trust Company 505103

2,285

3.21

The Bank of New York Mellon 140044

1,249

1.75

1,220

1.71

Nippon Life Insurance Company

1,158

1.63

State Street Bank West Client-Treaty 505234

1,089

1.53

995

1.40

Foreign corporations, etc.

Other corporations

42.66%

5.59%

Northern Trust Co. (AVFC) Re U.S. Tax Exempted
Pension Funds

March
2018

March
2019

March
2020

March
2021

March
2022

JAFCO Group137.6%

111.9%

84.3%

188.6%

167.2%

Reference:
TOPIX Net Total Return115.9%

110.0%

99.6%

141.5%

144.3%

State Street Bank and Trust Client Omnibus AccountOM02 505002

Notes: 1. The Company holds 9,628 thousand treasury shares, which are excluded from theabove list of major shareholders.
2. The shareholding ratio is calculated after deducting the number of treasury shares.

(¥)(Thousand shares)

3,000

50,0002,400

40,0001,800

30,0001,200

20,000600

10,000

l

l

l

l

0

0
April 2012

Share price (left)
JAFCO INTEGRATED REPORT 2022

The Master Trust Bank of Japan, Ltd. (Trust Account)

Share Price and Trading Volume

Provides information on the Company’s corporate governance based on stock exchange
listing rules.

Provides more detailed information and data that are not included in the above media.

Shareholding
ratio
(%)

4,050

Total shareholder return

Type of information

Number ofshares held(Thousand shares)

Hikari Tsushin Kabushiki Kaisha

Investor Relations
https://www.jafco.co.jp/english/ir/

Name

Financial
instruments
business operators

ESG Activities
https://www.jafco.co.jp/english/company/esg/

disseminate information in a diversified manner.

69

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

April 2013

April 2014

April 2015

April 2016

April 2017

April 2018

April 2019

April 2020

April 2021

Trading volume (right)
JAFCO INTEGRATED REPORT 202270

https://www.jafco.co.jp/english/

JAFCO Group Co., Ltd.

Toranomon Hills Mori Tower 24F, 1-23-1 Toranomon, Minato-ku, Tokyo 105-6324, Japan