Private Equity Giant Blackstone Targets Japanese Market, Anticipates 'Accelerated Growth': Report

Private equity giants such as Blackstone Inc BX have seemingly gobbled up everything in the United States market, from pet care to real estate, even eying a purchase of sports teams. The NYC-based investment management company has eyed a new opportunity: the Japanese market.

What Happened: Nikkei Asia reported that Blackstone is planning to invest $9.6 billion in Japan by 2027.

“There are a number of factors that have come together that have really accelerated growth in the Japanese economy as well as investment opportunities,” Blackstone President Jonathan Gray told Nikkei. “It’s been the return of inflation to the Japanese economy, the strength in the stock market, the policies under Prime Minister [Fumio] Kishida, which have encouraged individual Japanese to move from savers to investors, which we think is very important, the encouragement of companies to focus on return on equity and to look at selling noncore divisions.”

The iShares MSCI Japan ETF EWJ is up over 9% in 2024 and the Japanese Yen is as weak against the U.S. Dollar as it has been in several decades.

Why it Matters: Blackstone is not alone in pursuing opportunities in the Japanese market. Investment managers, including Bain Capital and KKR & Co Inc KKR, are increasingly favoring Japan rather than China and India for investment opportunities.

Carlyle Group, which has previously invested in Japan, saw an internal rate of return of 28%, compared with around 8% to 14% for major Carlyle funds with focuses in Europe or Asia, according to Nikkei.

Berkshire Hathaway Inc BRK BRK has made several investments in Japan in recent years. CEO Warren Buffett famously prefers to invest in American companies, but a favorable Japanese interest rate environment led Berkshire to take stakes in the following Japanese conglomerates in 2020:

• Itochu Corp. ITOCY
• Mitsubishi Corp. MSBHF
• Mitsui & Co., Ltd MITSY
• Sumitomo Corp. SSUMY
• Marubeni Corp. MARUY

The late vice-chairman Charlie Munger championed Berkshire’s Japanese investments.

“It was like having God just opening a chest and just pouring money into it,” Munger said.

Also Read: Blackstone To Grant Equity To Rank-And-File Employees At US Buyouts: Report

Image generated using artificial intelligence via Midjourney.