With complex keiretsu under pressure to reform, regulatory and shareholder concerns are reshaping corporate Japan. This is creating a growing pool of investment opportunities for investors with experience in cross-border carve-outs.

There has been a significant shift in Japanese businesses over the last few years, with the recent rise in corporate sell-offs stemming from regulatory change. The Tokyo Stock Exchange devised the Corporate Governance Code to enhance sustainable, mid- to long-term corporate value[1] back in 2015 (with updates since), however long-standing corporate structures and cultural norms meant the initial response was sluggish. Action accelerated after Japan’s Ministry of Economy, Trade and Industry (METI) introduced new “Guidelines for Corporate Takeovers” in 2023[2] with the aim of promoting “desirable acquisitions”.

The guidance aims to shift corporate culture away from automatically rejecting outside offers and toward enhancing shareholder value, prompting leadership teams to rethink strategic priorities. Those adept at simplifying complexity and operational transformation are well positioned to grasp this opportunity and progress Japan’s structural corporate reform.

Vast scale
“As specialists in complex carve-outs, we are seeing increasing selling interest from Japanese groups, particularly in relation to non-Japanese assets,” explains Dirk Markus, AURELIUS Co-founder. “Our recent experience with Teijin and Resonac highlights the criteria these sellers typically prioritise.” (see box)

The scale of the opportunity is potentially vast: Japan is the world’s fourth-largest economy, with close to 4,000 publicly listed companies. Many are conglomerate-like in structure, with keiretsu holding portfolios of disparate businesses accumulated over decades.

Such businesses make for attractive private equity prospects, and the numbers bear this out. Data from Bain & Co[3][4]. show that Between 2010 and 2024, Japanese private equity deals generated market-leading returns, posting a 2.4x multiple on invested capital (MOIC), slightly higher than the 2.3x returns seen in the US market during the same period.

Much of this will be down to structural factors: financing costs in Japan remain low, with leveraged buyout debt typically priced at less than half the levels seen in the US (3–4%, versus with 8–9% respectively), and corporate balance sheets offer headroom for recapitalisation[5].

This is generating a growing pipeline of opportunities, including outside Japan as Japanese groups seek to divest assets that sit outside their geographic or strategic core. These transactions are often complex, involving separation from global systems, standalone build-outs and sensitive stakeholder management across jurisdictions.

Cash, capability equally important for carve-outs
In carve outs, execution capability often matters as much as capital. Sellers value price, but certainty, speed, reputational sensitivity and the ability to execute complicated separations without disrupting the remaining group are often paramount. Experience in setting up independent organisations, managing transitional service agreements and supporting management teams through change will put bidders in the best stead.

AURELIUS’s long-standing focus on complex carve-outs aligns closely with the growing opportunity set in Japan. It has proven itself as a good custodian of newly independent businesses by engaging constructively with sellers, providing certainty of execution, and turning once underloved units into operationally transformed successes. “Over more than 20 years, we have built a tried and tested playbook for disentangling shared infrastructure, stabilising businesses post-separation and supporting and building out management teams through transition,” says Matthias Täubl, Lead Partner of AURELIUS WaterRise, AURELIUS’ team of 200 operational specialists.

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AURELIUS signs two carve-outs from listed Japanese corporates in 2025
AURELIUS has carried out two carve-outs from Japanese vendors among its eight platform investments last year. In both, the assets acquired sat outside the sellers’ core strategic focus and required careful handling of carve-out complexity, governance considerations and international operational separation.

The beginning of the year saw AURELIUS announce the acquisition of Teijin Automotive Technologies North America, the leader in advanced composite technologies for the automotive, heavy truck, marine and recreational vehicle sectors, from Japanese list parent company Teijin Limited. The acquisition – closed mid-year – marked the first transaction advised by the AURELIUS Investment Advisory team in New York, just months after opening its office addressing the North American market. The business was renamed CSP and generates annual revenues exceeding USD 1 billion. It has 14 locations across the US and Mexico, and a vertically integrated operation to sustain long-standing supply relationships with key OEMs in North America. AURELIUS is supporting the carve-out and new growth opportunities for the standalone business.

Later in 2025, AURELIUS signed the acquisition of FIAMM Energy Technology S.p.A from listed Japanese vendor Resonac Holdings Corporation. FIAMM is based in Northern Italy and makes energy storage solutions and advanced battery technologies. Generating revenues of EUR 377m (2024), it is a domestic market leader with a strong position across Europe, operating two sites with over 1,000 employees serving around 3,000 customers globally. AURELIUS was attracted by FIAMM’s potential to play a role in the global energy transition, and the WaterRise team will build on FIAMM’s strong brand and strategic position in its core markets to support a customer-focused transformation.

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“Japanese sellers increasingly prioritise buyers who can execute sensitively, protect stakeholder relationships and provide a credible future for carved-out businesses. We feel well placed to be that buyer, and aim to become more active in this space,” says Dirk Markus.

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[1] https://www.jpx.co.jp/english/news/1020/b5b4pj0000046kxj-att/b5b4pj0000046l0c.pdf

[2] https://www.meti.go.jp/press/2023/08/20230831003/20230831003-b.pdf

[3] https://www.privateequitywire.co.uk/pe-firms-eye-japan-as-deals-accelerate/#:~:text=Japan%20is%20emerging%20as%20a,to%20take%20public%20companies%20private.

[4] https://www.bloomberg.com/news/articles/2025-10-07/japan-s-private-equity-deals-are-booming-as-funds-seek-bargains?utm_source=website&utm_medium=share&utm_campaign=copy

[5] https://www.bloomberg.com/news/articles/2025-10-07/japan-s-private-equity-deals-are-booming-as-funds-seek-bargains?utm_source=website&utm_medium=share&utm_campaign=copy