Why Japan's new prime minister could cool the country's buyout boom
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Photo Illustration: Allie Carl. Photo: Pool via Getty Images
Japan is in the midst of a buyout boom, after more than a decade of being largely ignored by foreign private equity.
The big question is if that momentum can be maintained after Tuesday's election of a new prime minister, Sanae Takaichi.
Driving the news: Takaichi is the first woman ever picked to lead Japan, and is a hard-line conservative who cites Margaret Thatcher as her political inspiration.
- Between 2022 and 2024, she served as Japan's economic security minister.
By the numbers: Cross-border M&A for Japanese targets averaged under $14 billion per year between 2005 and 2019, per LSEG. That average jumps to $20.6 billion for the subsequent six years (including $27 billion so far in 2025).
- A big part of that increase comes from the U.S., including U.S. private equity.
- Drivers include corporate governance reforms and low interest rates.
Zoom in: Takaichi is an adherent of Abenomics, through which many of those reforms were enacted, but also has a strong nationalist streak that could cool certain deals.
- For example, she's proposed the creation of a CFIUS-like body that would coordinate evaluation of foreign investments on national security grounds.
- She also wants stricter rules on foreign purchases of land and sensitive sectors like data centers.
Yes, but: Takaichi was elected just 24 hours ago, so it's too early to really know her plans.
- For example, she originally wanted to renegotiate Japan's $550 billion investment commitment to the U.S., before later backtracking. That said, she still needs to find the money, at the same time that she wants to increase domestic spending to boost a sluggish GDP.
The bottom line: Japan deal activity should continue to thrive, even if Takaichi cracks down more than expected, given the deep well of opportunity in non-sensitive sectors. But the pace of growth could cool.
