Private equity dealmaking in Japan surged to an all-time high last year, though local firms still favor internal funds and bank loans over equity financing.
Private equity deal value in Japan reached $47.48 billion across 300 deals in 2023, marking a historic high for the market. The rise reflects growing investor interest in Japan’s cash-rich corporates, stable financing conditions, and governance reforms, according to data tracking the sector.
Despite the record activity, a survey of over 1,000 Japanese executives revealed persistent caution toward equity financing. Nearly half of respondents relied on internal funds for growth, while 35.5% preferred bank loans, underscoring a preference for traditional funding methods.
Major global firms, including KKR, Bain Capital, and Advent International, have expanded their Japan-focused strategies, opening new offices in Tokyo. However, local companies’ reluctance to embrace equity financing may limit further growth in the sector.