On January 1, 2010, I became the president of JAFCO Co., Ltd.
I would like to take this opportunity to thank all shareholders for your support.

Although the stock market turmoil resulting from the worldwide economic downturn is showing signs of abating, the domestic IPO market, which is the main exit for our investments, was at a 31-year low last year and remains extremely subdued. Also, the operating environment of our unlisted investees remains as severe as ever, hit hard by the weak economy, further contributing to the difficult conditions that greet our new management team.

JAFCO is in a position to ride out the turmoil and create opportunities from the current economic difficulties. We will reexamine each stage of the Private Equity Value Chain (see the chart below) and strive to create value through a flexible approach to existing concepts.

JAFCO's PE value chain

Currently, Japan is facing an aging society and other changes to its social structure as well as changes to the global economic structure resulting from the rise of developing nations. The emergence of companies and entrepreneurs who embrace new values is vital for Japan to continue along a path of economic growth.

We are seeing a higher number of entrepreneurs in their 20s and 30s and ambitious managers at major corporations who aim to fulfill their potential through the creation of spinoff ventures. Despite recent concern over the falling level of new business creation in Japan, these trends are intensifying and the infrastructure necessary to support entrepreneurs is strengthening year-by-year. This includes the emergence of a legal framework to encourage business creation, closer industry/ government/ academia ties, and an expanding M&A market.

With JAFCO's large-scale funds ensuring access to sufficient investment capital and current investment valuations at multi-year lows, we have a golden opportunity to leverage our position through bold, carefully-selected investments.

Under our business philosophy of “value creation through private equity", we aim to provide continuous backing for those companies which have the potential to shape our society in the 21st century. This is our fundamental mission.

I look forward to your ongoing support.

January 2010
Shinichi Fuki, President & CEO