TOKYO: Goldman Sachs Group Inc is planning to expand its acquisitions and investments in Japan’s booming corporate deals market over the next decade by about 800 billion yen (US$5.1bil), with a focus on medium firms.
The Wall Street investment bank is looking for corporate clients in areas such as management buyouts (MBOs), subsidiary sales and business succession planning, said Yu Itoki, managing director in its Japan unit’s growth equity and private equity team.
He sees strong global institutional demand for Japanese allocations, while more and more companies are keen to carry out projects such as MBOs and sales of non-core assets.
“We’re in an environment now where we can invest at double or triple the pace compared with before,” Itoki said in an interview.
“Supply and demand are aligned between investors targeting Japan and companies seeking funding,” he said.
Deal volumes involving Japanese companies in 2025 jumped to record highs of around US$350bil, as corporate governance reforms aimed at bolstering shareholder returns led to more transactions.
Multi-billion-dollar megadeals have emerged, but Itoki said those aren’t the main target for Goldman because there’s intense competition for them, reducing their appeal.
The bank is instead targeting medium companies valued from about 30 billion yen to 300 billion yen that tend to lack capital and human resources needed to expand overseas or carry out mergers and acquisitions, he said.
“In many cases, the quality of their business is high,” with a big market share in Japan, “but they lack the resources necessary for further growth,” Itoki said.
Goldman has already started such investments, acquiring in 2022 the road-building company Nippo Corp with an investment of around 200 billion yen in collaboration with Eneos Holdings Inc.
In 2024, the US bank teamed up with the founding family and others to carry out an MBO for Nihon Housing Co for around 94 billion yen.
The US investment bank is focused on four sectors, including tech firms it’s invested in like taxi dispatch app operator Go Inc and smart lock company Bitkey Inc.
Healthcare is another area, and Kakehashi Inc straddles health and technology, providing software data over a cloud service to pharmacies.
The company raised about 14 billion yen from Goldman Sachs and existing shareholders earlier this year.
A third preferred sector is industrials, a broad area that includes Nippo and Nihon Housing, according to Itoki.
Raksul Inc, a web-based service provider, is another, and it’s just announced that it will carry out an MBO for 120 billion yen.
Industrial firms aren’t “necessarily experiencing high growth,” but they have “high-quality technology and services, and with ample room for value improvement through operational efficiency and slimming down of balance sheets,” Itoki said.
Goldman didn’t have holdings in the fourth sector, consumer firms, until it acquired Burger King Japan, announcing the deal in November.
Furthermore, it bought the fast food business from Hong Kong investment company Affinity Equity Partners for around 70 billion yen.
Quick service restaurants like Burger King have shown high growth since the Covid-19 pandemic, with hamburger joints doing especially well, said Itoki.
It takes time and money for overseas private equity funds to set up their own teams and invest directly in Japan due to the language barrier and different business practices and regulations.
“Many investors think it is rational to entrust their funds as LPs to houses with teams and track records in Japan,” Itoki said, referring to limited partners.
With funds entrusted to Goldman, “I want to responsibly make allocations to help Japanese companies grow.” —Bloomberg
