Corporate Japan looks for growth overseas

Jun Tsusaka, partner and managing director of TPG Capital Japan is a strong believer. As he emphasized in his opening keynote, companies must think globally but act locally. Tsusaka noted that there is strong international demand for Japanese firms' technology and process expertise, but expansion should not come at the expense of the unique, locally-driven characteristics that saw these companies emerge in the first place. Tsusaka added that, even at the best of times, overseas expansion is a necessity: Japan has only 12 cities with a population of more than one million to China's 243.

His thoughts were shared, in one form or another, by most of his peers at the conference, who see China and India as the most attractive markets although there are concerns about rising valuations in both countries. Addressing the audience, Tsusaka countered: "Do you find other investors afraid of the bubble bursting?"

A member of the TPG investment committee, Tsusaka has clearly been talking to David Bonderman, who recently told Hong Kong press that he was optimistic about China's long-term growth prospects. (Bonderman will also be speaking at the forthcoming AVCJ Forum 2011, which takes place in Hong Kong November 7-11.)

The other key takeaway from the first day of the event was wealth of investment opportunities in Japan's small and middle markets.

First, Yoshito Hori was keen to talk up the venture route. Japan's leading VC argues that the traditional definition of "expansion" has changed because the internet has made globalization less risky. If you create a good product online you can download it in Malaysia, the Philippines, the US and China - costs are low and exposure is broad. Second, competition in the middle market is minimal yet it remains a sweet spot. According to Joji Takeuchi of Japanese gatekeeper Brightrust, 77% of domestic private equity deals are found in the small- to mid-cap space.

However, principals of large global firms continue to stress that Japan is one of few Asian markets that can produce deals large enough to move the needle of multi-billion dollar vehicles. It is, of course, a waiting a game, a point most effectively captured by Yuji Kato, head of Permira Japan: Patience is a virtue. Waiting for the right target is the only way to make real returns in Japan.

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• Topics
• North Asia
• Buyouts
• Expansion
• Early-stage
• Japan
• AVCJ Events
• TPG Capital
• Permira Advisers
• M&A
• buyout
• Venture