After booming in the United States and Europe, private equity finally seems to have set its sights on Japan. Two of the world's top three private equity firms -- Kohlberg Kravis Roberts & Co. and Texas Pacific Group -- have each opened offices in Japan or expanded their existing Japan operations over the last few months. Smaller firms including Japanese companies are likewise boosting their presence in the market.
But despite this activity, there is an obvious question: Is Japan ready to give private equity a role to play in its corporate world? At first glance, the answer seems to be no. In 2005, Japan's share of the global PE market was less than 1 percent, while North America accounted for nearly half the total.
Public discussions on future trends also ignore PE, instead focusing on the hostile takeover bid by Hokuetsu Paper Mills Ltd. for Oji Paper Co. and on short-term investors, such as the Murakami Fund. The reformation of the Long-Term Credit Bank of Japan into Shinsei Bank led by Ripplewood is probably the only case known to the public that successfully involved a PE firm.