Blackstone leads the race to unlock US$7 trillion of cash in Japan

[TOKYO] Steve Schwarzman has become an unlikely fixture in Japanese media of late. The Blackstone co-founder stars in a 30-second television commercial in Japanese as he touts the acumen of the world’s biggest alternative asset manager. The pitch is backed by newspaper ads and social media videos, along with a reprint of his biography.

The rare media blitz is aimed at winning over what Blackstone sees as the largest private wealth opportunity outside the US, the legion of millionaires who hold a sizeable chunk of the US$7 trillion in cash parked in Japanese households. Blackstone and rivals such as EQT and KKR are trying to coax them to put more of it in private equity and credit.

“The wealth channel is a gekisen, a violent war,” said CJ Morrell, Japan head of Fiera Capital, a Canadian asset manager with US$120 billion in assets under management. “Everyone’s fighting to get a product on the shelves.”

This push into Japan marks the latest effort by some of the world’s biggest buyout funds to tap individual investors as returns wane and institutional backers grow increasingly impatient over delays in getting their money back. The retail drive is well underway in the US and Europe, and Japan has now become the focus in Asia.

By any measure, the potential is staggering. Japan has 2.7 million millionaires – the fourth-largest cohort in the world after the US, China and France, and is forecast to be the fastest growing among those countries, according to UBS Group. Morgan Stanley predicts that Japan’s richest will inject an additional 397 trillion yen (S$3.3 trillion) into the markets over the next decade, just as the return of inflation erodes gains from fixed income and cash.

“People now understand ‘cash is king’ is over,” said Kaoru Fujita, managing director and head of Japan private wealth at Blackstone in Tokyo. “They need to build financial assets to compete with inflation.”

Winning over Japan’s wealthiest investors won’t be easy. Many of them are elderly and need sa teady cash flow to fund their retirement. Financial products tied to private equity, infrastructure or private credit are often semi-liquid, meaning investors can typically cash out quarterly at best. Private equity investments ranked last in a 2025 survey of where the nation’s rich like to invest their money – trailing luxury watches, art and cryptocurrency, according to Hakuhodo Affluent Marketing Lab.

“Japanese investors are cautious about unfamiliar things,” said Shuhei Igarashi, president of Tokyo-based wealth management firm ValueAdvisers. “Names like Blackstone or terms like private equity aren’t well recognised yet.”

At a recent event, Japan’s Financial Services Agency (FSA) highlighted the growth of Japanese retail exposure to private assets and the need for customers to fully understand what they are investing in, according to a presentation seen by Bloomberg News.

In a separate interview in Tokyo, FSA vice-commissioner Mamoru Yanase said that a necessary prerequisite for private offerings “is to provide customers with appropriate explanations of the product’s characteristics, including its risk profile”.

An academic paper in the US highlights the risk for retail investors. It argues that private equity returns have not exceeded public markets of late, and that forcing increased liquidity on the funds for individual investors reduces some of the benefits of these long-term assets.

“Injecting retail investors into private equity directly threatens the very features that make private equity special,” according to the report last month by US law professors William Clayton and Elisabeth de Fontenay.

Film producer Yoshihiro Shimamura is among the private market sceptics. He built his wealth through real estate and now has almost all of his money in stocks. He’s ignored the pitches to buy into the asset class.

“I won’t invest in things that I can’t manage and control,” he said. “Liquidity is the most important, and if your money gets locked up, it’s not worth the trouble.”

Still, Igarashi said more of his clients have started enquiring about private and alternative investments after the recent stock rally. The benchmark Nikkei 225 Stock Average has risen for three straight years, and six of the last seven, ending decades of meagre returns. The benchmark has gained another 15 per cent this year, among the most in the world’s developed markets.

“Many feel equities are overvalued, and are looking for other options,” he said.

Sentiment change

The private equity giants are trying to seize on that changing sentiment, especially as more money gets passed down by elderly millionaires.

While older investors tend to prefer income-generating products, their heirs might find private markets suit their investment needs better, said Markus Egloff, KKR’s head of global wealth solutions.

“Over the next few years, tens of trillions of dollars will be transferred to the next generation,” Egloff said.

The private pivot coincides with a Japanese government drive to move more household assets into financial markets to promote economic growth. And it dovetails with a shift in strategy at brokerages like Nomura Holdings to focus on wealth management, particularly private products and alternatives, where they can command higher fees.

To step up their commercial campaigns, the international firms have recently held events in Tokyo’s luxury hotels, such as the Ritz-Carlton, or at private clubs where financial advisers mingle with C-suite executives over scallops hors d’oeuvres and champagne.

The pitches are starting to gain traction. About US$1.8 billion was raised from the seven products launched in 2025 tied to alternative private market strategies, according to data from the Japan Securities Dealers Association. Add in products launched in 2024 and the total rises to about US$5.5 billion. That’s just the publicly released figures – some products with higher buy-ins are offered through private banks, for which data is not available.

Blackstone gains

Blackstone has been the most successful asset gatherer so far. Its private equity strategy has raised more than US$2 billion since launching in 2024, according to the dealers’ group. A private credit product, started in 2023, has raised US$1.9 billion. Most of the flows are coming from cash deposits or bond investments that have come due, Fujita said.

Yasunori Yoda, a 48-year old corporate executive in Tokyo, is one of the converts. He’s invested about a third of his financial assets in these products, including KKR’s private equity strategy. He does not mind the limited liquidity because he has other income streams.

Yoda has already seen the value of his investments go up – partly because most private assets are denominated in US dollars, and the yen has weakened in recent years. He sees private assets as key to diversification.

“I rebalance my portfolio from time to time, and plan to increase investments in private equity-related assets,” Yoda said.

Distribution networks

The global investment giants need to work with domestic brokerages to get their products to more retail investors such as Yoda. In the past year, KKR, EQT and Ares Management have tied up with Nomura, Daiwa Securities Group and others to launch products tied to their private market strategies. They typically come with a minimum investment of about US$50,000.

Nomura chief executive officer Kentaro Okuda has said that he’s seeking to increase alternative assets under management to more than 10 trillion yen by 2031, up from about 3.3 trillion yen as at December.

When Stockholm-based EQT launched its flagship private equity strategy in Japan last year, the wealth team travelled to more than 80 brokerage locations of Sumitomo Mitsui Financial Group over three weeks to educate advisers on the new offering. Japan is one of EQT’s top priorities in Asia, said Shin Nakano, the firm’s head of private wealth in the country.

“This is the right moment to position ourselves as one of the early movers and capture the private wealth opportunity,” Nakano said. BLOOMBERG