Wealth Strategies
Japan's Increasing Private Equity Momentum – Preqin
Big deals, such as Toshiba's move off the public markets, and the impact of corporate governance reforms in recent years, have encouraged private equity investors to take a closer look at Japan.
Total private equity deal value has already reached $20.7 billion in Japan this year so far as the Asian economy shows definite signs of lifting off after a number of “false dawns” over recent decades, according to Preqin Research. The report chimes with positive noises from other quarters about the country.
The $15 billion-plus take-private of Toshiba by Japan Industrial Partners, announced in March, will be the largest of its kind in Japan’s history. A buyout of the multinational conglomerate has long been on the cards, with Bain Capital in the frame just over a year ago, Preqin said.
Although the OECD forecasts modest GDP growth of 1.3 per cent this year, the country is seeing a belated post-Covid rebound in domestic demand. Private equity-related deal activity in Japan experienced substantial growth in 2021 to 2022. The volume of transactions, including investments and exits, reached 276 last year, worth $25.9 billion, it said.
The report comes at a time when a number of fund managers appear to have turned more positive about Japan’s economic prospects and investment case. (See stories here and here.)
The study noted that other major deals included an investment by Singapore sovereign wealth fund GIC in HR software group WHI Holdings, to jointly own it with Bain Capital, who bought the company out in 2019. There was also the take-private of lighting equipment group Iwasaki Electric by Carlyle Group, and of engineering solutions group IDAJ, also by Bain.
Corporate governance reforms in the country have meant more information has been made available about portfolio companies. This has encouraged private equity deal-making by fund managers, and in some cases direct deals by investors, the report said.
Meanwhile, Japan-based general partners now have more than $13.7 billion of private equity dry powder – aka unspent capital.
