SMFG, Nippon Life in talks to set up 500 billion yen private credit fund: sources
The fund will provide loans for leveraged buyouts and other areas such as real estate transactions and mezzanine financing
Published Mon, Apr 6, 2026 · 05:05 PM
[TOKYO] Sumitomo Mitsui Financial Group (SMFG) and Nippon Life Insurance are in talks to set up a private credit fund with initial capital of at least 500 billion yen (S$4 billion), people familiar with the matter said, as the Japanese financial giants seek to capitalise on a surge in corporate deals.
Japan’s second-largest bank and biggest life insurer are working on the details of the fund, which will provide loans for leveraged buyouts (LBO) and other areas such as real estate transactions and mezzanine financing, said the people, who asked not to be identified because the discussions are confidential.
The two companies are planning to set up a joint venture that will manage the fund, which could also accept other investors, the people said. They have yet to decide the fund’s size, and it is not clear yet how the commitments between the firms will be split.
A Nippon Life spokesman said the company has been exploring various ways to enhance its asset management business but nothing has been decided. Sumitomo Mitsui representatives declined to comment.
The move would mark a milestone in Japan’s credit market, where the three biggest banks – including Mitsubishi UFJ Financial Group and Mizuho Financial Group – have dominated lending for buyouts in the country. The fund opens up the opportunity for non-banks to provide credit for such deals as well.
In LBOs, loans are made using the assets of takeover targets as collateral. Demand to finance buyouts is rising as more Japanese companies sell non-core assets or take themselves private following reforms to make listed firms more accountable to shareholders.
Japan’s banking industry and financial regulator are trying to expand the providers of LBO finance to include regional banks and insurers, to better accommodate growing demand and avoid concentration of risks.
At the same time, global investment firms have been looking to establish private credit operations in the country. Apollo Global Management, Blackstone, and KKR have begun staffing up in Tokyo to originate loans locally, although progress is likely to be slow.
Sumitomo Mitsui chief executive officer Toru Nakashima sees growth potential in private credit in Japan given the increase in buyouts, he said in an interview last month. Meanwhile, Nippon Life has been trying to diversify its more than 80 trillion yen investment portfolio away from bonds and stocks. BLOOMBERG
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