TOKYO, March 27 (Reuters) - Tokyo-based investment firm

Japan Activation Capital (JAC) said on Thursday it had closed

its second fund at 77 billion yen ($511.93 million), bringing

the total amount it has raised from domestic institutional

investors to about 210 billion yen.

JAC was established in 2023 by a former Carlyle Group

executive in Japan, Hiroyuki Otsuka, to invest in mid- to

large-cap listed Japanese firms, partnering with growth-minded

management teams to achieve "private equity style value

creation."

The second fund's close comes as Japanese authorities

intensify efforts to promote investment in the domestic stock

market.

JAC's first fund, which closed in April 2024, raised 130

billion yen, primarily from Japanese mega-banks and insurance

companies. The firm said the second fund was backed by a wider

range of domestic investors, including regional banks,

government-related funds and a university endowment.

"In a shrinking domestic market, our desire to support

firms' growth and raise their profile by taking proactive steps

led to investor interest," Otsuka told Reuters in an interview.

JAC's strategy is to build constructive relationships with

company executives and to only invest with their approval, he

said. "It's important to strengthen companies' fundamentals

through engagement," Otsuka added.

JAC's first investment was in Lion Corp ( LIOPF ), a

manufacturer of toothbrushes, soaps, detergents and other daily

goods, in October 2024, for an undisclosed sum.

Lion released an updated medium-term management plan last

month, the day after which its stock price jumped 18%. Lion's

stock price is up around 13% from the closing price the day

before JAC's investment was announced.

JAC is currently discussing investment with around 20

companies and intends for each investment to be in the region of

tens of billions of yen, Otsuka said.

"There are an increasing number of a new generation of

proactive company managers who want to raise the growth stage of

their companies by partnering with a fund," he added.

($1 = 150.4100 yen)