Private equity-related dealmaking in Japan jumped last year, as low interest rates and an ample supply of targets helped make the country the only market in the Asia-Pacific region to see growth, according to Bain.

Deal value in Japan last year nearly tripled compared with the annual average from 2018 to 2022, rising 183%, a report from the consultancy showed on Monday. Comparatively, Asia-Pacific deals fell 35% in the same period to the lowest level since 2014.

Japan’s momentum is expected to continue into 2024 as companies face pressure to improve shareholder value and become more willing to work with buyout firms to sell off businesses or go private, said Sebastien Lamy, the Tokyo-based co-head of Bain’s APAC private equity practice.

"We have to put Japan in a broader context which goes beyond interest rates,” Lamy said in an interview. "It’s a multi-year trend.”

The nation’s active dealmaking scene runs counter to the doldrums private equity is facing around the world. Globally, overall deal value, exits and fundraising for the sector have fallen after central banks hiked rates, dampening investor appetite.

Some prominent transactions in Japan in 2023 include the ¥2.1 trillion ($14 billion) takeover of Toshiba and the sale of Fujitsu’s chip packaging subsidiary Shinko Electric Industries in a deal worth $4.7 billion.

Japan still faces challenges. Private equity firms need to hire and retain local talent to be successful in the market, according to the report, which also highlights currency fluctuations as a risk to consider.