At the dawn of the private equity business in Japan around 2000, after the collapse of the bubble economy, there was a growing need in the industrial world for business restructuring to break out of the economic stagnation in Japan. Laws were being developed to allow the establishment of holding companies and stock exchanges, and high hopes were pinned on private equity as one of the main players in the restructuring process.
However, due to the conservative nature of the Japanese people and the image of “funds” as vultures, there were fewer business restructuring projects than expected, and the industry developed mostly in response to business succession needs.
A quarter of a century later, the situation has changed dramatically, as a Bank of Japan report released in December 2020 stated, “It is suggested that an increase in added value per employee can be expected by increasing sales without reducing the number of employees,” dispelling the image of “funds” as vultures. The image of “funds” as vultures has been dispelled, and the funds are now proving to be a major player in the restructuring of many large companies. In terms of figures, buyout fund transaction volume has been around 3 trillion yen per year in recent years. A Bain & Company report indicates that buyout funds are involved in 13% (2016-2022) of all M&A in Japan.
The Association has been disclosing fund performance and, beginning in 2023, has also begun disclosing employment data for its portfolio companies. Funds often tend to focus on performance, but in fact, they are making every effort to improve corporate value during the period they invest. In the process, there are various dramas. We are in some cases the scriptwriters, directors, and performers. There are as many dramas as there are investments, and it is not easy to describe them all. Each drama we create with our portfolio companies is worthwhile, and we are always seeking to perfect the drama. Our Knowledge Sharing Committee facilitates the sharing of our drama creation know-how, and our PR Committee actively distributes the contents of our dramas to the outside world through columns and online news. The ESG Committee conducts surveys and compiles data on the quality of drama from an ESG perspective, and shares knowledge to further improve the quality.
In its 19th year, the Association has become an organization with more than 160 regular and supporting members. We would like to once again express our gratitude for the cooperation and support of many concerned parties that have contributed to this expansion. We look forward to your continued support as we strive to enhance the value of Japanese companies.
Japan Private Equity Association
Chairman Ryosuke Iinuma