DOWNLOAD: How Japan is realising its potential as a PE market

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Japanese private equity roared ahead in 2020 and reached a three-year high of $4.5 billion, according to Private Equity International’s latest Japan Special Report. Three-quarters of Japan-focused funds met or exceeded their targets last year and the average size of Japan-focused funds rose 60 percent to $375 million.

There are strong arguments for suggesting that despite covid-19 – and perhaps even partly because of the pandemic – 2020 marked the moment when the world’s third largest economy finally matured into a fully fledged international private equity arena where local funds and the big international GPs compete vigorously for attractive deals.

Succession deals have seen a substantial growth as “the pandemic has created a tailwind for business succession deals as owners seek to take risk off the table while they are still healthy”, according to NSSK chief executive and CIO Jun Tsusaka.

There were 986 private equity deals recorded last year involving domestic and international private equity and venture capital firms, up from 945 in 2019 and 967 in 2018, according to S&P Global Market Intelligence figures. At $24.5 billion, transaction value did not match the 2018 record of more than $41 billion, but it beat all other previous years – some feat given the pandemic’s disruption.

Japan’s venture landscape is also blooming as investment volumes rose to more than $4 billion in 2019.

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– With reporting from Graeme Kerr and Vicky Meek.