Private finance structures to drive bumper Japan M&A into 2026, Goldman says

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By Anton Bridge and Miho Uranaka Japan's mergers and acquisitions market is set to maintain buoyant growth momentum into 2026, with increasing deal sizes supported by innovative financing structures involving private capital, a Goldman Sachs NYSE:GS executive said.As Japan's largest companies streamline business portfolios and target growth investments, financing structures that tap the vast pool of private capital are set to bring more deals over the line, David Dubner, chief operating officer of global M&A and head of M&A structuring, said in an interview with Reuters.These "high-grade" financing models combine equity and debt with private credit sourced from long-term private capital such as insurers.When partnering with large investment-grade corporates, the structures maintain investment-grade credit ratings, which significantly lower capital costs.Dubner said these strategies are likely to further fuel Japan's M&A boom, which neared record levels in 2025. Globally, they are increasingly used to finance AI-related data centre and power infrastructure.Japan's M&A deal value in the year to December 10 totalled $315 billion, LSEG data showed, the highest in the past 25 years bar the $343 billion logged in 2018."Japanese companies want to invest in innovation and growth opportunities," Dubner said. "The buyers are trying not to overstrain their balance sheets and look for creative sources of capital."One notable example was the $7.4 billion buyout of Air Lease Corp NYSE:AL in September, where Sumitomo Corp TSE:8053 and SMBC Aviation Capital joined forces with asset managers Apollo and Brookfield, and Goldman Sachs served as adviser. The investment bank's pipeline of similarly structured deals globally has grown since the transaction.Private equity firms with insurance capital arms are aggressively seeking opportunities to invest and their partnerships with strategic buyers provide an additional source of capital beyond traditional financing such as equity and debt.This expands the scope for Japanese firms' buyout opportunities. "Some of the targets that Japanese firms thought were a stretch are real now," Dubner said.Bigger deals are also on the horizon. Many of Japan's blue-chip firms retain sizeable non-core businesses and trade at a conglomerate discount despite Japanese authorities' multi-year effort to encourage companies to consider their sharehold...

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