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Laxman Pai, Opalesque Asia: Japan's private equity (PE) industry is just beginning to grow, with Japan focussed PE assets under management (AUM) at $68bn as of December 2020, said a study.
According to the Preqin report, 'Alternative Assets in Asia - Japan', the total dry powder in Japan-based PE funds is $25bn as of December 2020, up 53% from a year ago.
The report found that Japan is one of the most attractive buyout markets today as corporate acceptance of private equity grows.
The report also found that Japanese deals scored well above other regions in terms of risk/return profile, with PE delivering a median net IRR of 18.2% for funds launched in the decade 2008-2018, and the lowest risk coefficient, with a standard deviation of 13.0% on aggregate IRR.
What's more, Japan-based private equity AUM focused on buyouts more than doubled in the past three years, from $13bn in 2017 to $26bn in December 2020. There has been a steady momentum of deals, including corporate carve-outs, and those involving family or closely-held businesses addressing succession issues.
While Japanese resistance to private equity-which stems from a conservative corporate culture-still exists, widespread acceptance is expected to increase as attractive returns and lower risk profiles continue to attract investors.
Meanwhile, Preqin data also shows that venture capital (VC) investment in Japan more than doubled in the past three years, from $1.7bn in 2017 to a record...................... To view our full article Click here
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