One of KKR’s key investment themes in Japan is to provide solutions to bottlenecks in the country’s economic growth. The recent acquisition of Yokohama-based computer systems integrator Fuji Soft exemplifies this strategy very well, partner Eiji Yatagawa said in an interview with this news service.

“If you look at bottlenecks to Japan’s future economic growth, you can find excellent mid-to-long-term investment opportunities. Fuji Soft fits perfectly into our strategy of providing solutions to address Japan’s structural social challenges,” said Yatagawa, who serves as KKR’s head of private equity (PE) in Japan.

Following a long, high-profile takeover battle with Bain Capital, KKR privatised Fuji Soft after a JPY 628.3bn (USD 4.27bn) deal in May this year. Fuji Soft provides solutions to enable the digital transformation of Japanese companies, an area where the country is facing an acute labour shortage of IT engineers, Yatagawa added.

Meanwhile, Japanese corporates are lagging behind in utilising IT technologies compared with many other countries, which is why KKR sees growth potential and business opportunities in the country, he noted.

Similarly, KKR has identified growth potential arising from severe labour shortages in Japan’s logistics industry, including warehouse workers and truck drivers, contributing to its acquisition of Logisteed, formally Hitachi Transport in 2023, Yatagawa explained.

Logisteed acquired local peer Alps Logistics in 2024 for around JPY 105.2bn (USD 720m) as part of its roll-up strategy.

During the same interview, KKR director Hideaki Miyauchi, who also serves as an outside board member of Fuji Soft along with Yatagawa, said that Fuji Soft will consider M&A if it identifies good opportunities.

Fuji Soft’s management team is currently discussing medium-to long-term strategic goals, and details of its M&A strategy will be hammered out during this process, Miyauchi noted. He went on to say that Fuji Soft exemplifies another key pillar of KKR’s investment strategy in Japan –– the utilisation of real-estate assets held by a portfolio company.

As announced last week, Fuji Soft now plans to divest major real-estate assets to the real-estate investment trust (REIT) fund managed by KJRM Holdings, a local KKR company, in a lump-sum deal of JPY 68.6bn (USD 470m).

KKR and Fuji Soft tied up this complex transaction involving more than 10 buildings just over three months after the completion of KKR’s buyout. This was made possible thanks to KKR’s ownership of KJRM, Miyauchi said.

Meanwhile, Fuji Soft plans to lease back some of the office spaces it divested to KJRM’s REIT fund. The REIT fund is a publicly listed permanent pool of capital so Fuji Soft can operate with the secure knowledge of long-term use of office spaces, Yatagawa said, adding that this gives KKR an advantage against other PE funds when competing for targets in Japan.

The tender offer battle for Fuji Soft between KKR and Bain Capital drew much public attention, as it was a rare public fight by two of the largest PE funds active in Japan.

Following disclosure rules set out by the country’s Financial Services Agency, KKR made a formal, binding takeover bid for Fuji Soft on 8 August 2024, offering JPY 8,800 per share.

Bain Capital then announced its intention to launch a counter takeover bid in or after November 2024, with a bid price earmarked about 5% higher than KKR’s offer. This was an informal, non-binding announcement of a potential takeover bid, but it immediately pushed up Fuji’s stock price. The action led to some commentators to question the apparent lack of regulatory measures governing informal announcements, as reported by Mergermarket on 27 February this year.

Looking back at the tender offer battle with Bain Capital, Yatagawa said he now believes that in general, bidders should be required to prove to the financial authorities that they have sufficient funding to finance a potential takeover bid if they intend to make such announcements public.

Yatagawa also said he believes if a bidder intends to launch an unsolicited tender offer without the support of the board of directors, they should do it from the start of the process, not after switching from a friendly offer following conclusion of a non-disclosure agreement (NDA) and obtaining confidential information on a target.

“An unsolicited offer is totally acceptable under (tender offer) rules. But if you intend to do that, you should do it from the beginning, with due diligence based on public information,” Yatagawa noted, adding KKR itself has an internal rule not to launch any unsolicited takeover bids.

Miyauchi also said he believes there should be a review of the regulatory rules governing NDAs when it comes to takeover bids, saying practices such as Bain’s, if repeated, could impact how companies run an auction process and the M&A market in general.

Bain Capital initially proposed a friendly takeover and received confidential information from Fuji Soft by concluding an NDA. However, after Fuji Soft’s board members rejected Bain’s proposal, Bain switched to a unsolicited offer and refused in December 2024 to destroy the information it received under the NDA.

Bain eventually agreed to discard the information in January 2025 and withdrew its tender offer plan in February 2025.

Bain Capital did not return a request for comments by the time of the publication of this article.