Report Overview

An increasing allocations from pension funds, insurers, and banks, a rising demand for alternatives amid low interest rates, and growing government push to make Japan an asset management hub are expected to drive Japan Private Credit Market during the forecast period between 2025 and 2031.

Japan Private Credit Market – Industry Trends & Forecast Report, 2031

Japan Private Credit Market size was estimated at USD 11 billion in 2024. During the forecast period between 2025 and 2031, Japan Private Credit Market size is projected to grow at a CAGR of 11.96% reaching a value of USD 22 billion by 2031. Prominent drivers of Japan Private Credit Market include a growing shift among Japanese investors toward private markets, rising demand for higher-yield alternatives, and supportive government initiatives. With an aging population and low domestic interest rates, pension funds, insurers, and high-net-worth individuals are increasingly allocating capital to private credit, private equity, real estate, and infrastructure. Government reforms, such as the expansion of NISA, are encouraging households to transition from savings to investments, boosting retail participation. At the same time, global asset managers are strengthening their presence in Japan through partnerships and fund offerings, while leading players, such as Blackstone, KKR, and Ares are expanding private credit origination. These developments underline Japan’s growing role as a critical market for alternative investments, offering significant opportunities for both domestic and international managers.

Private Credit – Overview

Private credit refers to non-bank lending where funds, asset managers, or financial institutions provide debt directly to companies, often in the form of direct lending, mezzanine financing, distressed debt, or structured credit. It offers flexible capital solutions outside traditional banking, catering to SMEs, corporates, and specialized projects.

Japan Private Credit Market

Growth Drivers

Growing Government Push to Make Japan an Asset Management Hub

The growth of Japan Private Credit Market is gaining momentum, strongly supported by government initiatives aimed at positioning the country as a global asset management hub. The ruling Liberal Democratic Party has been urging the Government Pension Investment Fund (GPIF) to increase its allocation to private equity and venture capital, particularly in domestic markets, to capture more value locally and support Japanese dealmakers. Complementing this, the government has introduced its “Policy Plan for Promoting Japan as a Leading Asset Management Center,” which includes expanding the Nippon Individual Savings Account (NISA), corporate governance reforms, and efforts to shift household savings into productive investments. These measures are further reinforced by leading financial institutions such as Mitsubishi UFJ Financial Group and Sumitomo Mitsui Trust, which are scaling up private asset offerings across private credit, infrastructure, and real estate. Together, these reforms and industry responses are accelerating household and institutional participation in alternative assets, laying a strong foundation for private credit growth and solidifying Japan’s role as an emerging hub for global asset managers.

Challenges

Limited Adoption among Smaller Investors

Despite rising interest from large institutional players, Japan Private Credit Market continues to face limitations due to the slow adoption among smaller investors. Retail and mass-affluent households still allocate more than half of their assets to cash and deposits, reflecting a strong preference for liquidity and low-risk savings. This conservative approach restricts the flow of capital into private credit, which is relatively illiquid, and complex compared to traditional instruments. Limited awareness, lack of investment experience, and cautious risk appetite among smaller investors remain key barriers, restraining the pace of market expansion despite broader structural and policy support.

Impact of Escalating Geopolitical Tensions on Japan Private Credit Market

Escalating geopolitical tensions can significantly impact the growth of Japan Private Credit Market by creating uncertainty in global capital flows and investor sentiment. Heightened conflicts or trade disputes often trigger currency volatility, particularly affecting the Japanese yen, which raises hedging costs for foreign investments. Such instability can also disrupt cross-border deal-making and reduce foreign institutional participation in Japan’s private credit space. Moreover, global supply chain disruptions and rising energy prices may increase default risks for borrowers, leading to tighter underwriting standards. As a result, geopolitical risks can slow fundraising momentum and restrain growth opportunities within Japan’s evolving Private Credit Market.

Japan Private Credit Market

Segmental Coverage

Japan Private Credit Market – By Instrument Type

Based on instrument type, Japan Private Credit Market is divided into Direct Lending, Mezzanine Financing, Distressed/Special Situations, Structured Credit, and Unitranche Loans segments. The direct lending segment holds the highest share in Japan Private Credit Market by instrument type. It is driven by rising demand from mid-market companies and private equity sponsors seeking flexible financing solutions outside traditional banking channels. Japanese financial institutions, particularly Mitsubishi UFJ Financial Group (MUFG), are increasingly expanding their direct lending operations, reflecting the segment’s dominance and growth potential. With fewer regulatory hurdles compared to conventional lending, direct lending offers faster execution, tailored structures, and attractive returns for investors. This has positioned direct lending as the preferred instrument in Japan’s private credit landscape, consolidating its role as the leading driver of market growth.

Japan Private Credit Market – By Borrower Type

By borrower type, Japan Private Credit Market is divided into Small & Medium-sized Enterprises (SMEs), Large Corporates, Real Estate Developers, Infrastructure & Project Financing, and Startups & New-Economy Businesses segments. The small & meidum enterprises segment holds the highest share in Japan Private Credit Market by borrower type, reflecting the pivotal role these businesses play in the country’s economy. Government-backed credit guarantee programs have been instrumental in facilitating SME access to private loans, mitigating risk for lenders, and encouraging investment. Recent reforms aim to enhance the efficiency and reach of these guarantees, ensuring funds are directed to viable SMEs while monitoring risk exposure. Additionally, international initiatives supporting micro-, small-, and medium-sized enterprises further underscore the growing focus on this segment, solidifying SMEs as the primary driver of growth in Japan’s private credit landscape.

Japan Private Credit Market – By End Use

On the basis of End Use, Japan Private Credit Market is segmented into Real Estate, Infrastructure (Energy, Transport, Utilities), Manufacturing & Industrials, Healthcare & Pharmaceuticals, Technology & Startups, and Consumer & Retail.

Competitive Landscape

Major players operating in Japan Private Credit Market include Mitsubishi UFJ Financial Group, Sumitomo Mitsui Trust Bank, Mizuho Financial Group, Nomura Holdings, Blackstone, KKR, Ares Management, Blue Owl Capital, Goldman Sachs Asset Management, and AlbaCore Capital. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In 2025 - KKR appointed Ken Murata from Goldman Sachs as managing director in Tokyo, marking its first private credit hire in Japan. Murata will focus on both private and liquid credit, reflecting KKR’s strategic push into Japan’s growing private credit market.

• In April 2025 - Keyaki Capital launched Japan’s first online private asset investment platform, providing high-net-worth investors with seamless access to private credit, private equity, and other alternative assets. This platform, registered under Japan’s Financial Instruments and Exchange Act, enhances transparency and accessibility in the private credit market, enabling investors to participate in previously limited institutional-quality opportunities. The initial offerings include an open-ended private credit fund and the Marina Investment Fund, with plans to expand into additional private equity, real estate, and venture capital funds.

Scope of the Report

By Instrument Type

• Direct Lending

• Mezzanine Financing

• Distressed/Special Situations

• Structured Credit

• Unitranche Loans

By Borrower Type

• Small & Medium-sized Enterprises (SMEs)

• Large Corporates

• Real Estate Developers

• Infrastructure & Project Financing

• Startups & New-Economy Businesses

By End Use

• Real Estate

• Infrastructure (Energy, Transport, Utilities)

• Manufacturing & Industrials

• Healthcare & Pharmaceuticals

• Technology & Startups

• Consumer & Retail