When Ropes & Gray private equity partner Tsuyoshi Imai represented Bain Capital on its listing of memory chip company Kioxia at the end of 2024, no one knew how successful the float was destined to be.
Six years prior, Imai had advised Bain, which first set up in Japan two decades ago, on its $18bn acquisition of Kioxia – formerly Toshiba Memory. Earlier this year, Kioxia briefly became Japan’s single most valuable company by market cap, with a nearly 700% surge in its share price from January to June.
At time of writing, despite a significant slip, it remains one of the country’s largest businesses, with a market capitalisation of just under 27trn Japanese yen (around $170bn at current exchange rates).
‘It is crazy times when private equity can buy a company that becomes the largest company in the market,’ Imai says.
‘Efficiency is taking root’ – a maturing market
Japan is quickly cementing itself as the private equity darling of APAC, emerging as the only market in the region to record growth in both deal value and deal count in 2025, according to a recent Bain & Company report. And as private equity continues to deal with frosty capital markets in Europe, recent exits such as Bain’s are attracting global investors.
At the end of May, Kirkland & Ellis launched an office in Tokyo, hiring a trio of lawyers from White & Case, Morrison Foerster and Ropes. The opening, which partners in the market say was driven in large part by key PE client Blackstone, means Gibson Dunn is now the only one of the world’s ten largest law firms by revenue without a Tokyo office.
Other recent lateral moves have seen White & Case make a double partner hire from Freshfields, recruiting M&A duo Noah Carr and Gordon Palmquist in June, while A&O Shearman took on debt finance partner Rintaro Hirano from top domestic firm Nagashima Ohno & Tsunematsu in April after the exit of a corporate team to Mayer Brown.
‘There are lots of people who want to set up shop simply because of the returns on offer’
‘This is like candy land for private equity,’ Imai says. ‘Banks provide loans at low interest and there are all these structured companies that are easy to do due diligence on.’ In 2016, Japan’s central bank brought interest rates below zero, ushering in a period of cheap money that financed leveraged buy-outs of companies traditionally seen as undervalued in the market.
Yoshi Asaoka, a corporate M&A partner at Linklaters, adds that the depreciating value of the yen, which hit a 40-year low at the start of July, prices Japanese business at a major discount for international GPs.
And now successful floats, such as Kioxia or KKR’s former portfolio company Kokusai Electric, which went public in 2023, have acted as the final ingredient for investor confidence. ‘There are lots of people who want to set up shop simply because of the returns on offer,’ Imai says.
Incoming White & Case partner Carr says that cheap debt and undervalued companies have been a feature of Japan for some time, stressing the impact of reforms to corporate guidelines introduced in 2023. ‘Regulators have started to emphasise, in the way that almost every other country already does, that value to shareholders is what drives a board’s duties, not value to the corporation as a standalone entity,’ he says.
Linklaters’ Asaoka adds: ‘Efficiency is taking root in Japanese corporates’ mindset through the recent corporate governance reforms, making the Japanese market more investable and attractive to global investors.’
‘There’s nobody to hire’ – the battle for talent
While some firms in Tokyo, such as Ropes, are primarily focused on serving inbound private capital, others including White & Case and HSF Kramer are still benefitting from the region’s maturing corporate culture.
‘In the last year we have been on three or four sell-side mandates, which is very unusual’ says Graeme Preston, managing partner, Asia at HSF Kramer. ‘There is much more shareholder activism,’ he added. ‘Companies are under more pressure to return money to shareholders, and be leaner, more profitable businesses.’
‘Sometimes PE or a foreign strategic is the perfect solution,’ Carr says, ‘but there are some businesses where a Japanese company will hesitate to (or cannot) sell to a foreign buyer because of the nature of the asset. Japanese companies are good at buying but are much less experienced in organising themselves to carve-out and sell a business; those are really great opportunities for platforms like ours.’
Over the 26 years that the firm has been active in Japan, HSF Kramer’s strategy in the region has been designed to work alongside local Japanese firms, ideally receiving referrals from them. It has developed deep working relationships with the big five Japanese trading houses in order to capture their global investments. ‘It’s an expensive place to set up shop, but it’s also hard to break into the relationships with GCs,’ Preston adds. ‘It doesn’t happen overnight.’
‘The gestation period for private equity lawyers is not short – the market is growing faster than both the sponsor and adviser side can keep pace with’
Firms such as Ropes and Kirkland that are ‘quarterbacking work from the US into Japan,’ as one partner puts it, are less reliant on building relationships with Japanese clients to win work. However, the lateral market can be an obstacle to growth, according to several partners.
Ropes’ office currently has three partners and six associates, though Imai says the aspiration is to have at least 30 associates. ‘We would like to grow,’ he says, ‘but the problem is that the gestation period for developing private equity lawyers is not short. We’re all suffering because the market is growing faster than both the sponsor and adviser side can keep pace with.’
However, as international firms continue to gain brand recognition and private equity deal flow remains high, lawyers from the big four Japanese firms are beginning to move, though such moves remain rare. Examples include Asaoka, who joined Linklaters from Nishimura & Asahi in 2023, as well as A&O Shearman’s hire of Hirano from Nagashima Ohno this year.
However, one partner at a US firm emphasised the continued difficulty in luring talent from these Japanese platforms. ‘Firms are going to burn up a lot of air miles educating themselves on how difficult it will be to break into this market,’ they say.
One particular anecdote sums up that challenge: in conversation with one Tokyo-based partner, two leadership figures at a US firm looking to build their PE capabilities in Japan expressed dismay about the difficulty in hiring, saying ‘there’s nobody to hire.’
The Tokyo-based partner replied: ‘That’s right – welcome to Japan.’
