PE majors ask Japan to limit reach of state-backed funds

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news_japan_fan_lrgA group of buyout majors have reportedly urged Japan to limit the presence of government-backed funds, which they say delay restructuring for troubled companies.

A report by Reuters said KKR, Carlyle Group and Bain Capital and other private equity firms said the state-backed funds – two of the largest of which have a combined capacity of up to $37bn – limit opportunities for private capital.

Thereport cited the example of KKR, which has recently lost the bidding war for chipmaker Renesas Electronics Corp to state-backed fund Network Corporation. Government funds frequently  favour softer restructuring plans than outside investors.

The Japan Private Equity Association (JPEA) said that without new controls, the government funding could allow companies to push back problems and retain idle assets.

“Policy-driven finance and government capital should be supplied only to attract private-sector funds, and should be invested with appropriate governance and accountability.”

The JPEA asked the government to limit the amount that state-backed funds can invest and the period of their investment as well as to monitor the return on such funds.

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