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Blackstone plans to spend $4.6bn on Japan acquisitions

US fund looks to scoop up non-core units as big corporations continue to divest

Blackstone is turning its attention to Japan as large companies spin off noncore operations and small, family-owned companies look to keep their businesses going.   © Getty images

TOKYO -- U.S. investment fund Blackstone Group is set to spend about 500 billion yen ($4.66 billion) on corporate acquisitions in Japan over the next three to five years.

The investments are in response to big companies like Hitachi and Toshiba increasingly divesting their non-core businesses in pursuit of better corporate governance and growth. Blackstone will also partner with Japanese companies to buy foreign companies.

Blackstone set up an Asia-focused corporate investment fund in December 2017. The fund, which is scheduled to finish soliciting capital around next month, is already investing in China and India and will soon begin snapping up companies in Japan.

Blackstone's business includes taking over assets sold by conglomerates such as electronics makers and buying domestic demand-led and family-owned businesses that have successor problems.

"We want to invest flexibly in various ways, small investments of a few tens of billions of yen," said Atsuhiko Sakamoto, head of Blackstone's corporate buyout team in Japan. He said that cash from a global fund managed by Blackstone will also be used to enable investments of about 1 trillion yen per project.

Joseph Baratta, global head of the fund's private equity, believes that it is time to start investing in Japanese companies, noting a drastic shift in their corporate governance.

The situation, he said, is reminiscent of big companies in Germany around 2000, when they began streamlining management by accepting capital from funds.

As low interest rates continue globally, there are high expectations that pension funds looking for high returns will invest their money in investment funds.

But many experts believe that the bullish stock market in the U.S. makes acquisitions there relatively costly, encouraging investors to look at Asian markets where they can expect higher returns.

Blackstone is the last major fund to make inroads into the Japanese market. Its entry is likely to intensify buyout battles. 

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