The value of private equity exits in Japan last year returned to the all-time high it scaled in 2021, at a time when funds are struggling to find liquidity through stock market listings and M&As in most other parts of the world.
Exits in 2024 stacked up to 1.9 trillion yen ($13 billion)—at par with 2021 levels— across 51 deals, per Bain & Co data. The exit value was about 19% higher than the 1.6 trillion yen ($11 billion) clocked in 2023, while exit volume in 2024 continued on an upward trajectory after falling off track in 2022.
“Exit value has started to recover to the level seen over 2015–2018,” Bain said in a recent report.
One of the most recent liquidity events was the public listing of Bain Capital–backed chipmaker Kioxia on the Tokyo Stock Exchange, with the company now commanding a market capitalisation of approximately $8 billion.
But Japan, one of the hottest markets, which is getting big cheques from the likes of KKR, Blackstone and Carlyle, is not immune to the ongoing macroeconomic fluctuations and geopolitical tensions that have plagued the industry in recent years.
The country is seeing fewer early exits within the period of three to four years as managers are holding onto assets for longer in an unfavourable trade environment, tapering off time-sensitive internal rate of returns (IRR).
Only 44% of the funds that initiated fees in 2018-2020 have realised their investments within five years of ownership—a stark contrast to 2012-2014 vintage funds (69%) and 2015-2017 (54%), the report said.
“In the near to medium term, volatility created by US tariffs could present a headwind to deal-making and exits, and the impact of tariffs themselves needs to be carefully assessed in diligence,” Bain said.
PE deal value stays above 3 trillion yen mark
Private equity-backed transactions in Japan totalled 3.1 trillion yen ($21 billion) in 2024, according to Bain data—down from 5.8 trillion yen the previous year, but still marking the fourth consecutive year that deal value has exceeded the 3 trillion-yen mark.
This is all thanks to local governments and regulators that have made the economy favourable for M&As and delisting for buyout barons.
“Government and regulators’ continued focus on improving Japan’s competitiveness through corporate governance and the recent M&A code encourages activist activity and support delistings,” said Jim Verbeeten, a Tokyo-based partner from Bain & Company’s Japan PE practice.
Take-private and broad auction processes are the predominant dealmaking characteristics in the market, Bain said.
MBK’s acquisition of Alinamin, Blackstone’s purchase of Infocom and Apollo’s deal for Panasonic’s auto business were among the headline deals last year.
The momentum has carried into 2025, with deal value reaching 1.6 trillion yen ($11 billion) across 24 transactions in the first quarter alone, even without factoring acquisitions worth 900 billion yen like in Bain’s Jamco as well as KKR’s privatisations for Fujisoft and Topcon.
Sebastien Lamy, co-head of Bain & Company’s Asia Pacific PE practice, however, cautioned that the transaction can get sticky as the tariff situation could dampen deal activities. “Changes in supply-demand dynamics, currency volatility and redirections of trade flows make it harder for PE to properly underwrite value. As we witnessed in past periods of volatility, some measure of delay or slowdown in deal-making is likely,” he said.
