Private equity firms are increasingly opting for a smaller stake in Japanese companies in the face of soaring asset prices, placing them in direct competition with hedge firms.
Buyout funds have opted to purchase assets at a discount to market prices, without securing a majority stake in the company, according to Reuters.
“This space is getting crowded with ‘non-traditional’ private equity investors and also hedge funds who can’t really compete in the buyout market. It is the same old problem of a great deal of money looking for a home,” said Daniel Hounslow, lawyer at Clifford Chance in Tokyo.
The article suggests that investors who have bought into funds in search of high-risk, high-return private deals could become concerned about changes to funds’ policies in Japan.
Share prices in Tokyo have soared recently, as the economy starts to bounce back from its slump of recent years, with fewer firms now seeking capital or force to sell off their assets.
Hedge, private equity and asset funds are now battling over a limited number of targets in Tokyo, as they attempt to preserve high returns for investors and seek new ways of investing cash.