Western Private Equity Firms Return To Japan
Date
1/31/2025 9:02:03 AM
(MENAFN- Asia Times)
They're back. After a hiatus earlier in the new century, Western private equity firms are increasingly targeting Japan for their Asian investment strategies. And the Japanese government and regulators have introduced bold initiatives to welcome them and facilitate remaking Tokyo as Asia's premier global financial market.
Back in the late 1990s and early 2000s Japan was a preferred target for Western alternative asset managers. In 1999, for example, Newbridge Capital , co-founded by Texas Pacific Group (now TPG), took a majority stake in the internet Service Provider Livedoor.
And, in 2000, J. Christopher Flowers and Ripplewood Holdings organized a consortium of investors to purchase Japan's distressed Long Term Credit Bank, renaming it Shinsei (translation:“rebirth”). After Shinsei went public in 2004, the deal was widely regarded as one of the most successful private equity transactions, not only in Asia, but in the history of private equity investing at that time.
Interest Wane d
But by the time of the Great Financial Crisis, Western firms began to find other Asian countries, most notably China and South Korea, more open and welcoming –countries where investors could attain greater financial rewards with fewer regulatory roadblocks.
While Western investors retreated, Asian PE funds continued to commit to Japan. The Asian PE giant PAG continued to build its team and investments in Tokyo. The firm bought Universal Studios Japan in 2015 and reportedly exited three years later with a five-times return on their investment. PAG's most significant investment of late is the largest theme park by physical size, Nagasaki's Huis Ten Bosch.
Nagasaki's Huis Ten Bosch theme park. Photo: Japan GuideOne industry observer told Asia Times that while, about a decade ago, there were a few of what he calls one-off“predecessor transactions” by mega global funds including KKR and Bain, Western PE firms had largely remained circumspect about Japan – at least until recently when the country made a conscientious effort to win them back by committing to a series of sweeping regulatory initiatives. These included:
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