Majority-Stake PE Transactions See Increase in Japan

In an article authored for IFLR, Jeremy White and Ganesh Vaheisvaran discuss how drivers such as succession challenges, cave-out opportunities, and recent regulatory reforms are creating strong momentum for PE majority-stake deals in Japan.

As noted in the article:

“Japan has historically been a relatively tough market for foreign investors to crack. While the legal and regulatory regimes generally welcome investments, Japanese sellers and targets have sometimes been wary of foreign investors disturbing the “wa” (harmony). There was particular wariness regarding foreign PE investors, perhaps exemplified by KKR’s acquisition of an 80% stake in Panasonic Healthcare (announced in 2013). Retaining a minority stake gave Panasonic time to become comfortable with how its former business division would be managed before ultimately completing its exit. According to Mergermarket, only 14 deals involving 100% acquisitions of Japanese businesses by foreign PE firms were announced in 2010 to 2012, compared to 38 in 2022 to 2024.”

“While the nearly three-fold increase in such 100% acquisitions suggests growing comfort with buyouts by foreign PE firms, we have also seen a recent uptick in majority-stake joint venture type transactions. This is where a foreign PE firm acquires a majority stake in a Japanese business, resulting in the PE firm controlling the business with the continued participation of its existing owner (often the founders of the business or a sprawling conglomerate). Several factors are converging to make Japan an attractive hotspot for such transactions. This presents a “win-win” opportunity for all involved parties.”

Read the full article (subscription required).