Private credit firms, encouraged by a combination of macroeconomic factors and changing investor attitudes to alternative credit, are expanding their presence in Japan.<\/p>\n
Fiera Capital opened a Tokyo office in October 2025 and made a number of hires, including C<\/a>hinatsu Aoyama as director, private markets specialist, earlier this year.<\/a><\/p>\n CJ Morrell, managing director and head of Asia distribution at Fiera Capital, said that \u201cJapan Inc [a term used for corporate Japan] is still very much stuck in that 60 per cent debt, 30 per cent equity, 10 per cent hedge fund\/alternatives\u201d approach to asset allocation.<\/p>\n However, he explained that \u201chigher inflation and choppy, volatile bond markets\u201d, has prompted a rethink. \u201cJapan Inc has been looking for alternatives, and the private market can deliver that,\u201d he added.<\/p>\n According to Morrell, allocations to private markets among institutional Japanese investors range from five per cent to 15 per cent, compared to around 40 per cent in Canada, the US and Western Europe. \u201cWe are in the very early stages of what I think will be a multi-decade move to embrace private markets,\u201d he said.<\/p>\n Read more: Blackstone lands \u00a51.5tn private credit mandate from Nippon Life<\/a><\/p>\n Inflection point<\/p>\n Takeshi Yamamoto, head of capital formation, Japan at Benefit Street Partners (BSP), and who joined the firm from Blue Owl Japan earlier this year,<\/a> believes \u201cprivate credit is at a clear inflection point\u201d.<\/p>\n \u201cHistorically, Japanese institutional investors\u2026 have been under allocated compared to their global peers,\u201d said Yamamoto. \u201cOne part of the story is the normalisation of the global allocation base.\u201d<\/p>\n Meanwhile, Kai Yasutomi, vice president at BSP, said that the drive to improve corporate governance in Japan means that institutional investors are \u201ctrying to get higher returns but with capital efficient methods\u201d.<\/p>\n \u201cI think we\u2019re seeing a good trend in terms of these clients are more sophisticated and more open to these new types of investments, like private credit,\u201d he added.<\/p>\n Tomoya Suzuki, senior credit officer at Moody\u2019s, observed that Japan\u2019s private credit market is expanding across direct lending, mezzanine, distressed and asset-backed finance.<\/p>\n \u201cDemand for fund finance \u2013 including subscription facilities \u2013 and bank lending to private funds is rising alongside sector growth, driven by corporate restructuring, increased startup activity, and demographic trends supporting mergers and acquisitions activity,\u201d Suzuki noted.<\/p>\n Four years ago, Hamilton Lane launched an open-ended senior private credit fund globally and in Japan. Last year, it established the yen-hedged class of that product, which has proven to be popular among regional banks, according to Tomoko Kitao, managing director, client solutions at the firm.<\/p>\n \u201cIn the past, regional banks have structurally driven appetite for overseas credit funds because, in Japan, it\u2019s been difficult for them to lend with a high yield, given the low interest rate and sluggish demand for capital,\u201d she explained, noting that the fund also \u201cresonated\u201d with corporate pension funds.<\/p>\n