TOKYO/HONG KONG (Reuters) – Private equity firms struggling to find reasonably priced assets in Japan are increasingly settling for smaller stakes in companies — pitting them against souped-up hedge funds in competition for deals.
While buyout funds are usually loath to invest without management control, some have been willing to compromise to buy assets at a discount to market prices. That could upset investors who allocated capital to the funds for high-risk, high-return private deals.
“This space is getting crowded with ‘non-traditional’ private equity investors and also hedge funds who can’t really compete in the buyout market,” said Daniel Hounslow, a lawyer at Clifford Chance in Tokyo who works on private equity M&A deals.
