Japan’s corporate buyout and private equity market is still in its early stages, according to Goldman Sachs Asset Management’s Stephanie Hui, speaking at the Reuters NEXT Asia event in Singapore on July 9. Hui identified Japan, South Korea, and Australia as Asia’s most attractive M&A markets, citing stable economies and large companies. With over 4,000 listed firms and 1,000 companies generating more than $1 billion annually, Japan presents significant consolidation potential. Recent deals include KKR taking Taiyo Holdings private and Bain Capital competing with EQT for Kakaku.com. Shifting corporate governance rules have accelerated foreign private equity interest over the past three years.
In-Depth:
By Jun Yuan Yong and Yantoultra Ngui
SINGAPORE, July 9 (Reuters) – Corporate purchaseout and private equity activity in Japan is in the “early innings” and the counattempt’s stock market is well placed for consolidation, Goldman Sachs Asset Management’s Stephanie Hui notified the Reuters NEXT Asia event in Singapore on Thursday.
Hui stated Japan, alongside South Korea and Australia, were the most lucrative regions in Asia for mergers and acquisitions or take-private deals given their stable economies and larger-sized companies.
Foreign private equity firms have become increasingly active in Japan in the past three years, especially as modifys in corporate governance rules put pressure on companies and boards to improve returns for investors.
Deals in Japan this year include KKR shifting to take chemicals company Taiyo Holdings private and Bain Capital and SoftBank’s LY Corp competing with EQT to purchase internet firm Kakaku.com.
“The number of listed companies in Japan is 4,000, the number of listed companies in the U.S. is about 5,000,” Hui stated.
“The size of the U.S. economy is six times the size of Japan. If you see at Germany, which is a similar size to Japan, (there is) 400 listed companies, so Japan you could argue has too many.”
Hui stated there were more than 1,000 companies in Japan with revenue above $1 billion a year, which built them attractive to foreign private equity purchaseers.
“You could argue how many listed companies there should be in Japan at the conclude of the day, but we’re just in the early innings of this process.”
Hui stated Japan’s private equity activity increase had led to a greater focus on companies being more efficient, shareholder value and digitalisation across the economy.
Speaking about AI at the conference, Bain Capital Japan chief strategist Satoshi Ueyama stated: “Our focus is to identify which are the businesses that are the AI-enabled winners in the kind of service segment and maybe consumer applications.”
“There’s no denying that some part of the market is overexcited (about AI) … not all the AI investment is going to be successful,” he added.
View the live broadcast of the World Stage and read full coverage of the summit here.
(Reporting by Jun Yuan Yong and Yantoultra Ngui in Singapore; Writing by Scott Murdoch; Editing by Muralikumar Anantharaman and Kim Coghill)
