Japan’s private equity market is continuing to draw investor capital as stronger returns – more superior than the US – sustained dealmaking. About $30 billion of private equity transactions closed in 2025, underscoring the country’s resilience even as buyout activity remains uneven in many global markets.
Private equity in Japan outperformed the US across key return metrics, with median total value multiple (TVM) reaching 2.5x compared with 2.1x in the US, while median internal rate of return (IRR) reached 31% compared with 22%, according to Bain & Co.’s latest report.
Lower loss ratios, more limited expansion of entry multiples and higher leverage levels have contributed to these returns, while many Japanese companies continue to offer significant opportunities for operational improvement and value creation.
“What makes Japan distinctive is not just the volume of opportunities, but the depth of value creation available across those opportunities. Even high-quality companies often have significant headroom for operational, commercial and strategic improvement, which continues to underpin the market’s strong performance,” said Jim Verbeeten, head of Bain & Company’s Japan PE practice.
Japan’s private equity market extended its strong run in 2025, collecting 4.8 trillion yen ($30 billion) of deal value, up nearly 30% from 3.7 trillion yen ($23 billion) in 2024, as investors continued to back one of the world’s best-performing buyout markets. Last year marked the fifth consecutive year of more than 3 trillion yen ($18.8 billion) in annual transactions, while exit value rose to a record 2.4 trillion yen ($15 billion) as funds harvested older investments.
Large buyouts remained the main driver of activity, with transactions above 100 billion yen ($625 million) accounting for around 70% of deal value. Take-private deals represented roughly half of annual deal value, reflecting the continued impact of corporate governance reforms and a rising number of delistings.
2026 is likely to ride the same trends, with several large-cap deals, such as Apollo’s $3.7 billion acquisition of Nippon Sheet Glass and Bain’s $1.3 billion privatisation of MCJ and the purchase of FineToday from CVC. Ongoing situations also include the bidding war for Kakuku.com between EQT and Bain, together with LY Corp; as well as TEPCO, which was reported to be in talks with Japan Industrial Partners, KKR, Blackstone and GIP.
The conducive environment continues to attract more global private equity firms to Japan. Tikehau Capital is launching its first Japan-focused buyout fund, while Advent International is re-entering the market after more than 15 years. UK buyout firm Aurelius also opened a new Tokyo office and hired a former Japan Post Holdings executive to source corporate carve-out opportunities.
