Private Equity Giants Size Up A Fresh Market In Japan

Samantha Luan

Stocks

Forex

Economic

Summary:

Megumi Kiyozuka, president of Japanese private equity firm Sunrise Capital, began raising money for his latest fund last year with a goal of hitting $500 million.

Megumi Kiyozuka, president of Japanese private equity firm Sunrise Capital, began raising money for his latest fund last year with a goal of hitting $500 million. He’d yet to take his pitch on the road outside Japan before global investors told him they were willing to commit as much as $2 billion.He decided to stick to $500 million—still plenty of money to put to work. It was a stark contrast to 12 years ago, when Kiyozuka traveled the world for an earlier fund, meeting 200 investors multiple times before finally cobbling together about $200 million from just two. “Years ago, people declined to invest in Japan because they said it was inefficient. Now everyone says they like Japan because it’s inefficient,” Kiyozuka says. “It’s the same reason, but it can be used as a reason to decline or to invest.”

For big investors around the world, Japanese companies that once seemed flawed are now more like low-hanging fruit: If a fund can buy them up and make some obvious fixes, it should be able to sell them again in a few years at a profit, either to another owner or in an initial public offering. The model has worked well for funds in the US, though in recent years a mix of higher interest rates, a slower market for selling companies and higher acquisition prices have weighed on returns. In contrast, Japan seems like fresh territory to hunt for bargains, especially given the relatively weak yen.

There have been 192 private equity deals in Japan so far in 2025, after 292 deals in all of 2024, according to data from the consultants at Deloitte. “Japan is fundamentally a very attractive market from a return perspective,” says Azusa Owa, a Japan-based partner at consulting firm Bain & Co. Between 2010 and 2024, Japanese private equity deals had the highest returns of any market globally, even after taking into account the fall of the yen. In dollar terms, deals in Japan returned 2.4 times the capital invested, edging out the 2.3 times return in the US.

The world’s fourth-largest economy provides ample deal targets, with almost 4,000 publicly traded companies. Many are cash-rich and conglomerate-like, with units that could be streamlined or sold off, or have avoided raising prices or negotiating costs for years as the country wrestled with deflation. And while financing conditions in other markets remain tight, banks in Japan are more than willing to lend. One key to private equity’s performance is that funds invest using debt, which ends up on the balance sheet of the companies the funds buy. Leveraged-buyout financing costs 3% to 4% in Japan, compared with 8% to 9% in the US. Japanese companies also have relatively low debt, making it easier for new owners to boost returns by borrowing now.

“Japan is still in the very early stage of its private equity history,” says Eiji Yatagawa, a partner and head of private equity at KKK & Co.’s Japan office. “This industry evolution still has a long way to go.” Japan is KKR’s top market for deploying capital outside the US; in one notable deal, in 2017, KKR acquired the company now known as Kokusai Electric Corp. from Hitachi for about ¥257 billion ($1.7 billion). It sold off noncore businesses to focus on semiconductor manufacturing and invested money in research and development and hiring before taking Kokusai public in 2023 at a valuation of around ¥424 billion.

KKR isn’t alone. Bain Capital has announced deals worth more than $10 billion in Japan so far this year. Within a two-week period in the summer, Blackstone Inc. and Swedish buyout firm EQT AB both announced deals worth about $3 billion to take public companies private. Firms such as the US’s Warburg Pincus and Singapore’s Hillhouse Investment Management have recently brought on executives for Japan and made plans to open physical offices.

The private equity business model has its critics around the world. Selling off assets or returning cash to reward new owners may leave companies weaker in the long run. “It does make sense that in an economy like Japan—where companies have historically not been focused on maximizing profits—private equity can sometimes help sharpen that focus,” says Ludovic Phalippou, a professor of finance and economics at the University of Oxford’s Saïd Business School. Still, “the pressure to increase returns can lead to cost-cutting or strategies that don’t necessarily improve outcomes for customers or employees. In either case, however, PE fund managers do well, because they charge extraordinary fees.”

The biggest blemish on private equity in Japan in recent years is Marelli Holdings Co. Created in 2019 when KKR merged auto-parts companies it owned in Japan and Italy, Marelli saw its business suffer during the Covid-19 pandemic and the later upheaval in the car industry. It sought court-led rehabilitation in Japan and filed for Chapter 11 bankruptcy protection in the US. KKR took a $2 billion hit and later invested another $650 million to return the firm to profitability. “That was definitely a very challenging situation and a difficult outcome for us and for banks,” Yatagawa says. “We believe we did everything we could.”

For years in Japan, private equity firms were often referred to as vultures, and they sometimes had difficulty even getting meetings with potential acquisition targets. But now they’re getting a warmer reception. Some smaller, family-run private businesses are facing succession issues and find it easier to sell. And a slew of corporate governance reforms have forced public companies to think more about deals that could reward their shareholders.

The Tokyo Stock Exchange is pushing its listed companies to get their share price above book value, while a new government guideline is asking public companies to seriously consider takeover offers. Activist hedge funds have descended on Japan, buying up shares in everything from small manufacturers to storied companies like Nissan Motor Co. and clamoring for change. In response, many companies are becoming receptive to selling off peripheral businesses to boost their share price, or they’re taking deals to just go private.

Some challenges loom as the Japanese private equity industry matures. Once the most obvious target companies are picked off, it may prove harder to squeeze the same returns from the next batch of investments. Private equity firms are also taking longer to get out of their investments in Japan: Only about 44% of deals done from 2018 to 2020 were exited with sales or IPOs within five years, down from 54% of deals during the 2015 to 2017 period, according to Bain & Co.

“Deal opportunity and availability is evolving, however not as fast as money is raised,” Bain’s Owa says. “Some funds who raised money struggle to use it.” That could lead to inflated prices for acquisitions. Teppei Takanabe, co-head of investment banking at Goldman Sachs Group Inc. in Japan, says the bank is getting more client inquiries about mezzanine funding—a riskier debt tool used to bridge gaps in financing for deals. That suggests valuations are growing faster than expected.

Atsuhiko Sakamoto, Blackstone’s head of Japan private equity, says the dealmaking momentum is still building. “The boom is just expectations. Reality hasn’t caught up with the hype yet,” he says. “I’m very excited about the next few years.” —With Manuel Baigorri

Source: Bloomberg Europe

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James Whitman

Central Bank

Economic

Federal Reserve Governor Michael Barr views Trump-era moves to loosen rules and relax supervision over Wall Street lenders as a mistake, saying that recent capital proposals threaten protections for smaller banks.

“As community bankers well know, it was not community banks that fueled the 2008 financial crisis — it was the largest, most complex firms whose excessive risk-taking nearly brought down the system. In the years since, strong reforms — higher capital, tougher liquidity requirements, and rigorous stress testing — have helped to safeguard our economy,” Barr said Wednesday in prepared remarks for a community banking research conference at the St. Louis Fed.

Barr emphasized that proposals to roll back capital standards threaten to erode crucial safeguards. Regulators have been looking to dial back some requirements, such as overhauling stress tests, which gauge how large banks would fare during a hypothetical recession.

“These shifts would not make the system safer; they would leave community banks once again exposed to the fallout if the largest players stumble,” said Barr, the Fed’s former vice chair for supervision.

Wall Street lending giants have long pushed for changes to regulations tied to capital requirements, arguing they are too burdensome and hinder their ability to function. But consumer advocates say tougher rules and strict supervision are intended to prevent future bank failures and another financial crisis.

Barr’s comments come ahead of a conference this week on community lenders that will be hosted by Michelle Bowman, now the Fed’s top bank watchdog.

Bowman has said that she is also focused on relaxing regulations for the smallest lenders and emphasized that her approach to community bank supervision will help those put those firms on stronger footing.

Source: Bloomberg

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Samantha Luan

Stocks

Forex

Economic

A cohort of Russian-speaking hackers known as Qilin has claimed responsibility for a ransomware attack that hobbled Asahi Group Holdings Ltd.’s operations for more than a week.The group stole roughly 27 gigabytes of data from Japan’s biggest beer brewer including financial documents, contracts, development forecasts and employees’ information, Qilin said on its website. Bloomberg was unable to verify the authenticity of the claims. Asahi is investigating the breach, a spokesperson for the Tokyo-based company said, declining to provide more details.

The outage at Asahi was the latest in a global wave of cyber-incidents that have hit carmakers, financial firms and hospitals. The hack underscores Japan’s vulnerability to online attacks, where even brief halts can ripple from factory floors to store shelves and restaurants given the country’s intricate supply chains.The Asahi Super Dry maker has restarted at least six of its 30 factories in Japan after the cyberattack paralyzed distribution and forced a halt to most of the company’s domestic production last week. A timeline for full restoration of Asahi’s systems remains uncertain. Employees have been processing orders over the phone, said the company, which first reported the hack on Sept. 29.

Qilin has been active since mid-2022 and targeted more than a hundred companies in more than a dozen countries, according to a list of alleged victims on the gang’s website. The group has said it was involved in a $50 million ransomware hack on UK hospital lab-service provider Synnovis, which led to hundreds of canceled operations and outpatient appointments in 2024.The group encrypts files on infected computers to prevent access. It also often steals data, which it then threatens to publish, if the target refuses to pay for the decryption key and opts to rebuild the computer system from a backup database. Such so-called double-extortion methods have become increasingly popular as a means to compel payments, according to Jon Clay, vice president of threat intelligence at Trend Micro.

It’s not clear if Qilin’s blog entry — which included screenshots of data it says it stole from Asahi — means the brewer refused to pay a ransom.

Source: Bloomberg Europe

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Damon

Economic

The world economy has proven more resilient than expected despite acute strains from multiple shocks, the head of the International Monetary Fund said on Wednesday, forecasting only a slight slowing of global growth this year and in 2026.

IMF managing director Kristalina Georgieva said the US economy had dodged a recession feared by many experts just six months ago. The US economy and many others had held up, given better policies, a more adaptable private sector, less severe import tariffs than feared — at least for now — and supportive financial conditions, according to a text of her remarks to an event at the Milken Institute in Washington.

"We see global growth slowing only slightly this year and next. All signs point to a world economy that has generally withstood acute strains from multiple shocks," Georgieva said in a preview of the IMF's upcoming World Economic Outlook.

In July, the IMF raised its global growth forecast by 0.2 percentage point to 3.0% for 2025 and by 0.1 percentage point to 3.1% for 2026.

It will release a fresh outlook next Tuesday during the annual meetings of the IMF and World Bank in Washington. The gathering takes place at a time when US President Donald Trump has upended global trade with steep tariffs and cracked down on immigration, and artificial intelligence is rapidly transforming technology and the outlook for labour.

The world economy is doing "better than feared, but worse than needed," Georgieva said, noting that the IMF was forecasting global growth of roughly 3% over the medium-term, well below the 3.7% forecast before the Covid-19 pandemic.

Georgieva cited deep undercurrents of marginalisation, discontent and hardship around the world, and said the global economy faced an array of risks.

Uncertainty is at exceptionally high levels and continuing to climb, while demand for gold — a traditional safe-haven asset for investors — is surging, Georgieva said, adding that holdings of monetary gold now exceeded 20% of the world's official reserves.

The US tariff shock has been less severe than initially announced in April, with the US trade-weighted tariff rate now around 17.5%, down from 23% in April, and countries largely skipping retaliatory tariffs.

But US tariff rates keep changing, and US inflation could rise if companies started to pass through more of the cost of tariffs, or if a flood of goods previously headed for the US triggered a second round of tariff hikes elsewhere.

Financial market valuations are also heading toward levels last seen during the internet-related bullishness 25 years ago, she said. An abrupt shift in sentiment — such as what happened during the dot.com crash of March 2000 — could drag down world growth, making life especially tough for developing countries.

"Buckle up," Georgieva said, adding, "Uncertainty is the new normal and it is here to stay."

Georgieva warns on debt levels

The IMF chief urged countries to durably lift growth by boosting private-sector productivity, consolidating fiscal spending and addressing excessive imbalances, allowing them to rebuild their buffers to prepare for the next crisis.

Global public debt is expected to exceed 100% of GDP by 2029, Georgieva said.

Competition is key, along with free-market-friendly property rights, rule of law, strong financial sector oversights and accountable institutions.

In Asia, countries need to deepen trade and carry out reforms to strengthen the service sector, Georgieva said. A push to lower non-tariff barriers and boost regional integration could lift gross domestic product by 1.8% in the long run.

In Sub-Saharan Africa, business-friendly reforms could boost the real GDP per capita of the median African country by more than 10%. Europe should forge ahead with building a single market, which could help it catch up with the dynamism of the US private sector, she said.

The US should take "sustained action" to lower its federal debt, with the debt-to-GDP ratio on track to exceed its all-time high after World War Two, Georgieva said. It should also work to boost household saving, such as through favorable treatment of retirement savings.

China also has work to do, including boosting fiscal spending on social safety nets and property sector clean-up, while cutting spending on industrial policy initiatives, she said.

Source: Theedgemarkets

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Warren Takunda

Cryptocurrency

Key takeaways:

Bitcoin onchain data shows no signs of overheating, despite reaching an all-time high of $126,000.

Bitcoin cup-and-handle pattern targets $300,000, backed by multiple factors.

Bitcoin traded 4% below its new all-time high of $126,000 reached on Monday. As BTC price consolidates around $122,000, several market analysts are convinced that the bull cycle is not over. Bitcoin Has ‘Room for Growth’: Why Analysts Say $300K Is Still in Play_1

Bitcoin Has ‘Room for Growth’: Why Analysts Say $300K Is Still in Play_1

BTC/USD four-hour chart. Source: Cointelegraph/TradingView

Bitcoin market is not overheated yet

For crypto analyst Mark Moss, Bitcoin has not yet reached its peak range.

While Bitcoin trades near all-time highs, its MVRV Z-Score remains far below levels historically associated with market tops. This divergence suggests the current rally may still have room to run.

The MVRV Z-Score measures how far Bitcoin’s market value deviates from its realized value, a proxy for the capital actually invested into the network.

“Bitcoin is breaking out to new ATHs, and yet it’s not looking anywhere near cycle peaks,” Mark Moss said in an X post on Tuesday.

He added that positive fundamentals, including quantitative easing (QE) by the US Federal Reserve, record spot BTC inflows, persistent buying by Bitcoin treasury companies, and market shift to “debasement trade,” could push Bitcoin price higher in Q4 2025. Bitcoin Has ‘Room for Growth’: Why Analysts Say $300K Is Still in Play_2

Bitcoin Has ‘Room for Growth’: Why Analysts Say $300K Is Still in Play_2

Bitcoin MVRV-Z Score chart. Source: Bitcoin Magazine

Similarly, CoinGlass’ bull market peak signals, a selection of 30 potential selling triggers aimed at catching long-term BTC price tops, are showing no signs of overheating. In fact, none of the indicators are flashing a top signal.

YouTuber Jesus Martinez, in particular, highlighted the Pi Cycle Top indicator to demonstrate that “Bitcoin still has a lot of room for growth.”

“The dollar is crashing, the world’s monetary system is crumbling, and considering markets have nowhere near the retail interest seen in 2021, we are still in a growth phase,” Martinez said, adding:

“The Pi Cycle Top Indicator is targeting a $200K Bitcoin right now.”Bitcoin: Pi Cycle Top indicator. Source: Glassode

Cointelegraph also reported that Bitcoin’s short-term holder MVRV pricing bands are well below overheated levels, signaling that BTC still has room for expansion.

Bitcoin price could rally to $300,000

The weekly candle chart shows that the price broke above the cup-and-handle neckline at $69,000 in November 2024. The BTC/USD pair is still validating the breakout and could rise to complete the maximum distance between the cup’s trough and the neckline.

That puts Bitcoin’s cup-and-handle breakout target for 2025–2026 at around $303,000, according to chartist Gert van Lagen.

Such a move would represent a 147% rally from the current levels. Bitcoin Has ‘Room for Growth’: Why Analysts Say $300K Is Still in Play_4

BTC/USD weekly chart. Source: Cointelegraph/TradingView

“Bitcoin’s new all-time high is just the beginning,” said a technical analyst, Jonathan Carter, while highlighting a similar setup on the two-day chart.

A successful breakout could see the BTC/USD pair “surge toward targets at $135,000, $145,000, and $160,000,” Carter said, adding:

“The long-term bullish target for this cycle is expected to reach between $200,000 and $250,000.”

As Cointelegraph reported, intense profit-taking at higher levels could see Bitcoin bull back toward $114,000, in the short term, potentially providing an entry point for late longs, before the uptrend resumes.

Source: Cointelegraph

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Michelle

Economic

Forex

The Bank of England on Wednesday warned that the risk of a "sharp market correction" has increased, noting that valuations appear stretched, particularly for artificial intelligence-focused tech firms.

The central bank becomes the latest in a long list of banks and investors to weigh in on whether an AI bubble is forming as markets tick into the fourth quarter.

Heightened geopolitical tensions, fragmented trade and financial markets and pressures on sovereign debt markets play into the risk, the Bank of England said in a record of its latest meeting minutes.

"A crystallisation of such global risks could have a material impact on the UK as an open economy and global financial centre," it said.

Equity market valuations stood at near all-time highs, the Bank of England said, thanks in part to strong second-quarter earnings by U.S. tech firms.

"The market share of the top 5 members of the S&P 500, at close to 30%, was higher than at any point in the past 50 years," it said, noting that AI-focused tech company valuations appear particularly stretched.

"This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic," the meeting minutes said. With such high expectations of future earnings growth, any pullback on AI-related bets could lead to ripple effects, it added.

Investors are closely watching AI-related stocks as earning season gets underway, with some strategists confident that tech company valuations are being driven by sound fundamentals. Goldman Sachs also remained cautiously optimistic in its latest note, believing a bubble has not yet formed but heeded a warning to investors to "diversify."

Federal Reserve Chair Jerome Powell, however, warned of "fairly highly valued" assets on Tuesday, though he didn't explicitly refer to technology firms.

The Bank of England further warned that "downside factors included disappointing AI capability/adoption progress or increased competition, which could drive a re-evaluation of currently high expected future earnings."

"Material bottlenecks to AI progress – from power, data, or commodity supply chains – as well as conceptual breakthroughs which change the anticipated AI infrastructure requirements for the development and utilisation of powerful AI models could also harm valuations, including for companies whose revenue expectations are derived from high levels of anticipated AI infrastructure investment," it added.

Meanwhile, the private credit market has suffered recently, following news that auto maker First Brands and auto finance firm Tricolor have filed for bankruptcy. Meanwhile, political uncertainty in France and Japan persists and questions remain over U.S. President Donald Trump's interference with the Federal Reserve, adding to the Bank of England's more gloomy outlook.

Changes to the risk landscape "increases the risk that markets have not fully priced in possible adverse outcomes, and a sudden correction could occur should any of these risks crystallise," the Bank of England said.

As such, it could have a knock-on effect for households and businesses in a market that is already feeling the pinch through high costs of living and borrowing costs, it added.

Source: CNBC

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Glendon

Cryptocurrency

Bitcoin continued to hover near the $122,000 mark on Wednesday, struggling to regain momentum after a sharp correction.

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD consolidating after a 4.2% drop from its all-time highs earlier in the week.

The pullback had been anticipated, following a series of record-breaking highs that lacked strong follow-through.

Rapidly rising open interest in Bitcoin derivatives had also fueled speculation of a potential retracement, as excessive leverage often precedes short-term pullbacks.

Market Liquidity Begins to Recover

Analyst Skew described the price action as “very efficient” with “low volatility,” noting on X that larger traders exhibited “predatory” behavior on exchange order books during the correction.

Overnight, liquidity began to return to the market. Data from CoinGlass indicated improving bid- and ask-side activity, hinting at renewed stability after Tuesday’s volatility.

Skew suggested that the market could settle into a “consolidation range” in the near term, as traders reassess key price levels.

Traders Assess Key Support Zones

Analysts are now focused on identifying Bitcoin’s next potential support zone.

Trader ZYN highlighted that the $121,000 to $120,000 range offers limited technical support, suggesting prices could decline quickly if selling pressure increases.

“But just below, around $117K, nearly 190K BTC were last bought. That’s a heavy cluster of recent buyers,” ZYN said. “If we get a pullback into that range, it’s the kind of zone where demand usually shows up — strong buyers defending their entries, new capital stepping in. In short: weak cushion at $121K, but a very real floor forming at $117K.”

Material Indicators, a trading analytics firm, also identified $120,000 as a potential support zone but noted stronger technical support near $114,000, aligning with Bitcoin’s 50-day simple moving average (SMA).

Analysts Expect Further Dip Before Rebound

Crypto analyst Michaël van de Poppe believes the next buying opportunity could appear near $118,000.

“Bitcoin made a new all-time high, which is often a reference for people to be taking profits,” he said. “Slight pullback and we’re approaching my personal area of interest for potential dip buying.”

Many traders see the current correction as a healthy pause in Bitcoin’s broader uptrend, with on-chain data still pointing to strong long-term demand and institutional inflows.

The post Bitcoin Struggles to Reclaim Momentum With Plunge Down to $112,000 ‘Likely’ in October appeared first on London Insider.