Back from the dead!

Political change and expansion drive presents opportunities for private equity deals in Japan, as Shinzo Abe rings changes. But with Japan’s record over the past two decades, investors remain cautious

 
 

The private equity market in Japan is set to see a significant upturn in activity in the coming year as a consequence of the relaxed regulatory policies being implemented by new Prime Minister Shinzo Abe.

The Prime Minister was sworn in to office at the end of last year after promising to improve competition in Japan’s economy, as well as planning a considerable stimulus package. As a consequence of some of these policies, many in the private equity industry believe that there will be plenty of opportunities to put together deals that will help medium sized companies expand overseas.

Bain Capital recently took a 50 percent stake worth $1.3bn in Sumitimo’s television shopping network Jupiter Shop Channel, according to Mergermarket, while Japanese firm Unison is rumoured to be looking at partnerships with other groups to acquire foreign businesses.

According to Carylyle Group’s managing director Tamotsu Adachi, there will also be a number of larger Japanese corporations looking to spin-off parts of their business. The firm expects to launch a third fund in the country this year, and co-chief executive Bill Conway told investors recently that the strong yen and struggling public companies presented private equity firms with plenty of opportunities: “Maybe they shouldn’t have been public in the first place, or they are underappreciated. The yen has risen 20 percent [against the US dollar] in the past three months.”

He added that his groups’ presence in Japan, dating back to 2006, has given it an advantage over other firms looking to crack the tough private equity market there. He added: “We’ve been there a long time and half of the money was from Japan, that made us more Japanese in some way and has given us a bit of a head start there.”