Goldman Sachs plans to expand its acquisitions and investments in Japan’s booming corporate transaction market by approximately 800 billion yen ($5.1 billion) over the next decade, with a focus on mid-sized enterprises.
Yoshiro Ito, managing director of the growth equity and private equity team at the Japanese branch of a Wall Street investment bank, said that the bank is seeking corporate clients and its investment areas include management buyouts, subsidiary sales and corporate succession planning. He believes that the demand from global institutional investors for the Japanese market is strong, and at the same time, more and more companies are also keen on carrying out projects such as management buyouts and the sale of non-core assets.
Ito said in an interview, “The environment we are in now allows us to invest at a pace two to three times faster than before.” He also said, “The supply and demand relationship between investors targeting the Japanese market and companies seeking financing has come into alignment.”
In 2025, the transaction volume involving Japanese companies is expected to soar to a record high of approximately 350 billion US dollars, mainly driven by corporate governance reforms aimed at enhancing shareholder returns, which have led to an increase in the number of transactions. Although there have been multibillion-dollar mega deals, Ito said that these are not the main focus of Goldman Sachs because the competition is extremely fierce and their appeal has declined.
He said that the bank’s target customers are medium-sized enterprises with valuations ranging from 30 billion to 300 billion yen. These enterprises often lack the funds and human resources needed to expand into overseas markets or carry out mergers and acquisitions.
Ito said, “In many cases, their business quality is very high and they have a large market share in Japan, but they lack the resources needed for further growth.”
Goldman Sachs has already started making such investments. In 2022, it collaborated with Eneos Holdings Inc. to invest approximately 200 billion yen in acquiring the road construction company Nippo Corp. In 2024, the US bank, in partnership with the founding family and other parties, carried out a management buyout of Nihon Housing Co. for around 94 billion yen.
This American investment bank focuses on four industries, including the technology companies it invests in, such as the taxi dispatch app operator Go Inc. and the smart lock company Bitkey Inc.
Healthcare is another field, and TIBA Corporation spans both the medical and technology sectors, providing software data to pharmacies through cloud services. The company raised approximately 14 billion yen earlier this year from Goldman Sachs and existing shareholders.
According to Ito Koki, the third industry to be prioritized is industry, which is a very broad field that includes Japanese pharmaceuticals and Japanese housing. Network service provider Raksul Inc. is also among them, and the company has just announced a management buyout at a price of 120 billion yen.
Ito said that industrial enterprises “may not be experiencing high growth at the moment”, but they possess “high-quality technologies and services, and there is still considerable room for value enhancement through improving operational efficiency and streamlining their balance sheets”.
Goldman Sachs had not previously ventured into the fourth sector – consumer goods companies – until it announced the acquisition of Burger King Japan last November. The company bought the fast food enterprise from Hong Kong-based investment firm Affinity Equity Partners for approximately 70 billion yen.
Ito Kida said that since the outbreak of the novel coronavirus, fast food chains like Burger King have been developing rapidly, with the performance of hamburger restaurants being particularly outstanding.
Due to language barriers and different business practices and regulations, overseas private equity funds need time and money to build their own teams and make direct investments in Japan.
Ito said, “Many investors believe it is reasonable to entrust their funds as limited partners to companies that have teams and track records in Japan.” He was referring to limited partners. Regarding the funds entrusted to Goldman Sachs, “I hope to be able to make responsible investment allocations and help Japanese enterprises grow and thrive.”
