By Alec Macfarlane
(The author is a Reuters Breakingviews columnist.)
HONG KONG, Aug 30 (Reuters Breakingviews) – Blackstone is raising its game in Japan. This week, the U.S. private equity giant hired Katsuyuki Kuki, a former top JPMorgan banker, as local chairman. It could also do Japanese deals through its first dedicated Asian buyout fund, which could raise up to $3 billion, says Reuters. The moves show a bigger commitment to a country where Blackstone has trailed rivals, and position it well for a share of a big new pot of money earmarked for alternative investments.
Unlike rivals Bain and KKR, Blackstone has so far focused on Japanese real estate and not corporate buyouts. A wider remit will show it has a bigger commitment to investing in Japan, and not just taking money out, which could help win over big public sector clients.
The big prize on the capital-raising side would be snagging a so-called “separate account mandate”. Under such a deal, which can run into billions of dollars, an investment manager handles a standalone pot of money for a big institutional client.
Entering Japan for buyouts now is also smart. This is a tiny market relative to the size of the economy: private equity buyers struck $8.1 billion of deals in Japan last year, versus $135 billion in the United States, according to Thomson Reuters data. But KKR has pulled off some big acquisitions, suggesting corporate attitudes are changing, and corporate reform should lead to more sell-offs of non-core businesses. Valuations are low compared versus other mature markets, and financing is cheap. This could be a good time to expand in Tokyo.
– Blackstone Group hired former JPMorgan banker Katsuyuki Kuki as chairman and representative director for Japan, the alternative asset manager said in a statement on Aug. 27.
– Kuki will “advise and support the firm’s investing and capital raising efforts in Japan” as it expands in the country, the statement said.
– Kuki had been chairman of banking at JPMorgan in Japan and spent nine years at the Wall Street bank in various leadership roles within investment banking. He has also held senior roles at UBS and Lehman Brothers in Japan.