YCP has published a white paper analyzing the structural transformation of Japan’s capital markets. It attributes the situation in which delistings have outpaced IPOs to the interplay of TSE reform, activist investors and private equity funds.
The white paper positions the fact that the number of companies delisted from Japan’s stock market exceeded the number of new listings in 2024 not as a simple contraction of the market, but as a “shift toward quality.” It points to growing emphasis on capital efficiency, corporate governance and market discipline.
Compared with the US market, where total market capitalization has expanded despite a significant decline in the number of listed companies, the paper suggests that Japan may undergo a similar structural transformation. It argues that the market is increasingly likely to be composed of highly competitive companies rather than driven by growth in the number of companies.
The paper identifies three factors accelerating the structural transformation of Japan’s market: TSE reform, activist investors and private equity funds. It describes these efforts to encourage companies to improve capital efficiency and corporate value as mutually reinforcing, supporting corporate transformation including capital reallocation and going-private transactions.
The white paper highlights the growing importance of going private as a strategic option, the growth of the private equity market, and the role of shareholder activism proposals in triggering business reorganizations and going-private transactions. Looking ahead, it points to the importance of a two-tiered structure that meets the demands of global investors and of hybrid capital strategies.