Here are some stats on private equity in Japan:
- 2003 new investments in Japan = $7.3B
- 2002 new investments in Japan = $2.4B
- 2003 new investments in Korea = $3.3B
- 2003 new investments in Australia = $2.8B
- 2003 new investments in China = $1.3B
- Colony Capital (US) invested $915M in Daiei
- Phoenix Capital (JP) has 100 bil. yen to invest ($906 m)
- Ripplewood paid $2.4B for Japan Telecom
- Japan domestic funds do the bulk of the below $100M deal (returns are less than 25-30%)
- At least 50 private equity firms in Japan
This says it all:
“There is too much money chasing after too few deals,” said Tetsuya Fukagawa, managing director of Warburg Pincus Japan, who declined to disclose how much his fund has invested in Japan.
Forbes.com: Competition heats up for Japan’s private equity pie [forbes.com via reuters]
I’ve said it before,
The only one who are going to be making money in Japan for the next decade are going to be foreign firms. They know it. The Japanese government knows it. The only ones who don’t are the biggest losers in the game. The Japanese taxpayers.
I think it’s about time for some major butt-kicking. (and I work for one of the foreign firms taking advantage of thie situation)
The Forbes article was wrong. Colony Capital did not invest US$ 915 M in Daiei – Colony purchased assets (the Fukuoka Dome, seahawk hotel etc.,) from Daiei, and I assume the article is referring to this transaction. Anyway, a bit beside the point perhaps.
I have a different view than Fukugawa san of Warburg. I do not believe that there is too much money chasing too few deals. I may agree that there is too much money chasing the “easy deals”. PE firms have done a poor job of identifying opportunities, and executing them.
There is significant demand in Japan for the services that PE firms provide; capital for growth or acquisitions, implementing restructuring programs, recruiting new management, etc.
I am with a PE firm as well. I agree with Shane that those (foreign funds or domestic financial institutionals) firms chase the easy ones.
The real problem is that those theory-driven MBAs and “theory-less” salarymen– I call them the “dome-domes”– can only tinker with positive cashflows but not real business.
If you can deal with those real business side of issues and can really manage or grow the businesses, I think we are looking at by far the best and least cultivated PE market.
Shane, Nick, Kakyou, I really appreciate your perspectives as I am not as close to the PE markets as you guys are. I look forward to additional discussions on similar topics. And if either of you (I know Kakyou already) are in Tokyo, please let me buy you a beer.