Japan’s private equity (PE) market maintained strong momentum in 2025, with deal value reaching JPY4.8 trillion ($29.8 billion), marking the fifth consecutive year that annual deal value exceeded JPY3 trillion, according to Bain & Company‘s Japan Private Equity Report 2026.
According to the report released on Monday, exit value rose to a record JPY2.4 trillion as sponsors worked through older vintages. Large-scale transactions valued at more than JPY100 billion accounted for approximately 70 percent of total deal value. Meanwhile, take-private transactions represented around half of total deal value amid a broader increase in delistings supported by ongoing corporate governance reforms.
Japan PE outperformed the United States across key return metrics, with median total value multiple reaching 2.5x compared with 2.1x in the US, and median internal rate of return reaching 31 percent compared with 22 percent. The report attributed these returns to lower loss ratios, more limited expansion of entry multiples, and higher leverage levels, alongside significant opportunities for operational improvement at many Japanese companies.
Jim Verbeeten, head of Bain & Company’s Japan PE practice, said Japan PE has moved beyond being an attractive niche market and established itself as a core destination for global private capital, noting that the depth of value creation available, not just the volume of opportunities, underpins the market’s strong performance.
As competition intensifies, with more global, regional, and domestic firms entering or expanding in the market, valuations on competitive deals have grown rich, with take-private transactions announced in 2025 frequently involving premiums of 60 to 80 percent.
Bunsho Kure, a Tokyo-based partner at Bain & Company’s Japan PE practice, said investors can no longer rely on market tailwinds alone, and that the ability to identify differentiated opportunities, develop a clear value creation plan during diligence, and execute quickly after acquisition is becoming increasingly important.
The report also noted that artificial intelligence (AI) is emerging as an important consideration for investors assessing both opportunity and risk, with those able to evaluate how AI may reshape competitive dynamics or create new sources of advantage better positioned to identify differentiated opportunities.
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