From vultures to value generators attitudes to private equity changes in Japan

Japan is set to be a major market for private equity following a cultural shift among the country’s investors, companies and government bodies.

“Today, the Japanese government increasingly sees private equity as a positive influencer, whereas 10 years ago it was different,” said Alex Emery, head of Asia at private equity firm Permira.

“Then private equity funds were referred to as vulture funds, hagetaka in Japanese, but now, that expression is no longer used, and private equity funds, at least those that have been in the market for a while and have proven themselves, are accepted as good counterparts.”

Permira is an example of this. Earlier this year it sold much of its stake in Sushiro, a sushi chain, in a US$615 million initial public offering, and sold the rest in September, as the chain announced a merger with a competitor.

“The government realises that there needs to be a stronger corporate culture of returns on equity, which means share prices need to go up, and that means businesses need to perform better,” said Emery.

“What was a cosy relationship between management, shareholders and the government where no one wanted to rock the boat has changed under the [Shinzo] Abe government.”