May 28, 2014 5:00 am JST

Japan's foreign direct investment reached new heights in 2013

TOKYO -- Direct overseas investment by Japanese companies climbed to 117.72 trillion yen ($1.14 trillion) as of the end of 2013, topping 100 trillion yen for the first time thanks in large part to major deals in the U.S. and Europe.

     The figure marks a 31% increase from the end of 2012. Net foreign assets, a category that includes direct investment, totaled an all-time high of 325 trillion yen, according to official figures released Tuesday.

     New investment climbed 35% in 2013 to 13.24 trillion yen. Nonmanufacturing investment, including finance and retailing, jumped 56% to 9.1 trillion yen, far outpacing the manufacturing sector's 5% rise.

     North American investment grew 60% to 4.6 trillion yen, while investment in Europe climbed 28% to 3.2 trillion yen, pointing to clear recoveries for both regions. Major deals included the acquisition of German bathroom fittings maker Grohe by Lixil and the Development Bank of Japan for 400 billion yen and mobile carrier SoftBank's 1.8 trillion yen purchase of U.S. peer Sprint.

     "A growing number of Japanese companies aiming to expand their global market share are acquiring European and U.S. companies with many sales channels in emerging markets," says Kotaro Masuda of the Institute for International Trade and Investment.

     In Asia, Japanese businesses were notably active in the Association of Southeast Asian Nations. Mitsubishi UFJ Financial Group bought Thailand's Bank of Ayudhya for 536 billion yen.

     Chinese direct investment fell for the first time in three years, declining 18% to 887 billion yen amid rising production costs owing to such factors as a minimum-wage hike. Icy Sino-Japanese relations likely played a role as well.

     To encourage foreign investment, the government will support purchases of foreign companies through the Japan Bank for International Cooperation. The bank will offer as early as this summer financing for leveraged buyouts using the target's future cash flow as collateral.