• Home
  • News
  • Analysis
  •  
    Regions
    • Australasia
    • Southeast Asia
    • Greater China
    • North Asia
    • South Asia
    • North America
    • Europe
    • Central Asia
    • MENA
  •  
    Funds
    • LPs
    • Buyout
    • Growth
    • Venture
    • Renminbi
    • Secondary
    • Credit/Special Situations
    • Infrastructure
    • Real Estate
  •  
    Investments
    • Buyout
    • Growth
    • Early stage
    • PIPE
    • Credit
  •  
    Exits
    • IPO
    • Open market
    • Trade sale
    • Buyback
  •  
    Sectors
    • Consumer
    • Financials
    • Healthcare
    • Industrials
    • Infrastructure
    • Media
    • Technology
    • Real Estate
  • Events
  • Chinese edition
  • Data & Research
  • Weekly Digest
  • Newsletters
  • Sign in
  • Events
  • Sign in
    • You are currently accessing unquote.com via your Enterprise account.

      If you already have an account please use the link below to sign in.

      If you have any problems with your access or would like to request an individual access account please contact our customer service team.

      Phone: +44 (0)870 240 8859

      Email: customerservices@incisivemedia.com

      • Sign in
     
      • Saved articles
      • Newsletters
      • Account details
      • Contact support
      • Sign out
     
  • Follow us
    • RSS
    • Twitter
    • LinkedIn
    • Newsletters
  • Free Trial
  • Subscribe
  • Weekly Digest
  • Chinese edition
  • Data & Research
    • Latest Data & Research
      2023-china-216x305
      Regional Reports

      The reports review the year's local private equity and venture capital activity and are filled with up-to-date data and intelligence on fundraising, investments, exits and M&A. The regional reports also feature information on key companies.

      Read more
      2016-pevc-cover
      Industry Review

      Asian Private Equity and Venture Capital Review provides an independent overview of the private equity, venture capital and M&A activities in the Asia region. It delivers insights on investments made, capital raised, sector specific figures and more.

      Read more
      AVCJ Database

      AVCJ Database is the ultimate link between Asian dealmakers and those who provide advisory, financial, legal and technological services to the private equity, venture capital and M&A industries. It is packed with facts and figures on more than 153,000 companies and almost 117,000 transactions.

      Read more
AVCJ
AVCJ
  • Home
  • News
  • Analysis
  • Regions
  • Funds
  • Investments
  • Exits
  • Sectors
  • You are currently accessing unquote.com via your Enterprise account.

    If you already have an account please use the link below to sign in.

    If you have any problems with your access or would like to request an individual access account please contact our customer service team.

    Phone: +44 (0)870 240 8859

    Email: customerservices@incisivemedia.com

    • Sign in
 
    • Saved articles
    • Newsletters
    • Account details
    • Contact support
    • Sign out
 
AVCJ
  • North Asia

Japan private equity: Heating up

  • Tim Burroughs
  • 16 June 2017
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Save this article  
  • Send to  

Private equity is seeing more succession planning and corporate carve-out opportunities in Japan, but there is a risk that exuberance might turn irrational

Japanese private equity has been gradually bouncing back from the 2006-2007 leveraged buyout boom for a number of years. However, a recent upturn in investment activity and an improvement in LP sentiment suggests the industry has finally drawn a line under the fallout from that previous excess.

In 2006-2007, GPs deployed an astounding $29.4 billion in Japan. Most of the high-profile transactions from those vintages ended up struggling. There followed a period of restructuring and reflection. Some firms rebuilt their franchises; others reduced their fund sizes to reflect a more modest opportunity set; and still more exited the market completely.

Annual private equity investment didn’t surpass $10 billion until 2016. Similarly, capital raised for Japan-focused funds – which came within touching distance of $4 billion in 2008 – didn’t reach $2 billion until this year, and there are still more than six months to go.

The general spirit of bullishness is reflected in the most recent edition of Coller Capital’s private equity barometer: 41% of North American LPs, 45% of European LPs, and 71% of Asia Pacific LPs believe that recent changes in Japan’s business and economic environment will create more opportunities for PE over the next three years.

There are two threads the investment narrative. First, a generation of founder-owners are nearing retirement age and have no heir within their family to take over the business. Selling to private equity was once an unpalatable option, but GPs can point to a growing number of succession planning deals that have worked out favorably for all concerned.

Second, Japanese conglomerates are being pushed, by government policy and global economic reality, towards investing in their core business areas and divesting the non-core assets. Private equity firms have long prodded – diplomatically – at these gigantic entities in the hope of seeing pieces come free. Now their patience apparently is being rewarded.

Neither of these threads is new, but the message from mid-market country GPs to global buyout players is that activity is rising. Generally speaking, succession deals are responsible for the growth in deal volume and carve-outs drive increases in deal value. On both counts, there is every reason to believe that PE is only scratching the surface of a sizeable investment opportunity.

But it remains to be seen whether expectation is skipping ahead of reality. Pan-regional PE firms are looking to deploy more capital in Japan, having recognized the changing dynamics. Furthermore, the spike in fundraising suggests that mid-market GPs have more dry powder than ever before; in several cases, the increase in fund size on the previous vintage is well above 50%.

Deal flow requires careful cultivation in Japan; some of the investments being completed now have been in the works for years. Even though the marketing is opening up, there is a danger that GPs will in haste enter into transactions that might in other times be sensibly foregone.

avcj170613-viewpoint

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Save this article  
  • Send to  
  • Topics
  • North Asia
  • Buyouts
  • Fundraising
  • Japan

More on North Asia

layerx
Japan's LayerX extends Series A to $67.5m
  • North Asia
  • 09 Nov 2023
integral-office
Integral makes partial exit from Japan’s Skymark
  • North Asia
  • 09 Nov 2023
jean-eric-salata-baring-2019
Q&A: BPEA EQT’s Jean Eric Salata
  • GPs
  • 08 Nov 2023
airport-travel
Asia’s LP landscape: North to south
  • LPs
  • 08 Nov 2023

Latest News

world-hands-globe-climate-esg
Asian GPs slow implementation of ESG policies - survey

Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...

  • GPs
  • 10 November 2023
housing-house-home-mortgage
Singapore fintech start-up LXA gets $10m seed round

New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.

  • Southeast Asia
  • 10 November 2023
india-rupee-money-nbfc
India's InCred announces $60m round, claims unicorn status

Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”

  • South Asia
  • 10 November 2023
roller-mark-luke-finn
Insight leads $50m round for Australia's Roller

Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.

  • Australasia
  • 10 November 2023
Back to Top
  • About AVCJ
  • Advertise
  • Contacts
  • About ION Analytics
  • Terms of use
  • Privacy policy
  • Group disclaimer
  • RSS
  • Twitter
  • LinkedIn
  • Newsletters

© Merger Market

© Mergermarket Limited, 10 Queen Street Place, London EC4R 1BE - Company registration number 03879547

Digital publisher of the year 2010 & 2013

Digital publisher of the year 2010 & 2013