Warburg Pincus CEO sees growing PE opportunity in Japan’s middle market

Japan is becoming an increasingly attractive market for global private equity investors as corporate reforms and structural changes create more opportunities to work with businesses, according to a report by Bloomberg citing comments from Warburg Pincus CEO Jeffrey Perlman.

In a Bloomberg Television interview, Perlman said Japanese companies were increasingly viewing private equity firms as potential partners that could help them expand and improve their businesses, rather than as adversaries.

He said Warburg Pincus sees an opportunity to apply its operational and value-creation expertise to Japanese companies seeking growth and transformation.

The firm is focusing particularly on the country’s middle market, where Perlman said competition was less intense than in the market for larger transactions and valuations remained appealing.

Warburg Pincus launched a JPY190bn ($1.2bn) tender offer earlier this year for Japanese student housing operator JSB Co. The transaction would represent the firm’s first take-private deal in Japan.

Perlman also pointed to the large number of publicly listed companies in Japan as a source of potential opportunities for private equity investors. Many are conglomerates that have accumulated businesses outside their core areas, creating scope for carve-outs, disposals and other forms of corporate restructuring.

The firm is therefore looking beyond headline-grabbing mega-deals, with Perlman highlighting the potential for investments in smaller and mid-sized businesses as well as corporate carve-outs.

Japan is not the only Asian market attracting Warburg Pincus. Perlman said businesses in India also remain appealing and indicated that the firm expects to continue increasing its capital deployment in the country.