Category: 3. Business

It is a common sight on construction sites across the world: the diesel-powered electricity generator. For one UK construction services business, there was a commercial opportunity in jettisoning these noisy, dirty machines and providing a sustainable alternative. 

Nixon Hire, based in Newcastle, north-east England, has in the past two years sold its business renting out construction equipment such as diggers and telehandler lifting machines, allowing it to invest in more environmentally friendly products.

The diesel generators have been swapped for batteries or hybrid devices comprising solar panels, a battery and a generator that runs on hydrogenated vegetable oil, a less polluting alternative. The company has also switched from supplying welfare vans (customised vehicles that provide site workers with kitchen or office space) to portable modular buildings.

The shift has been driven by customer demand for lower fuel consumption and carbon emissions, particularly public sector contractors, which are often required to factor in emissions when tendering for business.

The shift was not universally well received, however, with a more conservative portion of the construction marketplace questioning the benefits of renewable energy over the fossil fuel equivalent, according to Brian Cornett, the company’s recently appointed chief executive. 

“We set up sites for sceptical customers to try for free for a week, to break those barriers to entry, the conservative mindset, and fixed ideas about value for money,” says Cornett, who joined the company from rival Speedy Hire. “We’re having to do that much less now, but originally there was such an amount of pushback.” 

In August, Cornett took over from Graham Nixon, the architect of the changes who served as chief executive for 10 years after taking over from his father, John Nixon. Graham Nixon remains the company’s majority shareholder.

“The redesign of the company started with the customer, and we used that to reshape our operational dynamics, spending six months in the boardroom and out within our network,” Cornett says.

Convincing staff was also challenging at times. “The biggest challenge to Nixon Hire’s transformation was changing the company culture itself,” Cornett says. “The reality is that not everyone was on [the same] page. So we wished them well and looked after them [financially].”

Another barrier to reinvention, according to Cornett, was a reactive customer services operation. It was using technology that was unable to capture and analyse customer data in a way that allowed the company to foresee and respond quickly to demand. Last year, therefore, the company invested in a bespoke system that can remotely track and report on every aspect of customer interaction and key metrics associated with using Nixon Hire’s services. 

The information gleaned from this also provides a new service — data on the sustainability of the construction site, which clients can use to help them win contracts for which sustainability and evidence of carbon reduction is a requirement.

Nixon Hire is also focusing on longer-term contracts, of a year or more, to reduce customer churn and gain more insights; these in turn enable the provision of other “wraparound” services such as security or project consultation. 

Turnover rose 8.6 per cent to £108.3mn last year while operating profit rose 6.3 per cent to £7.8mn.

Allan Wilen, economics director at construction market intelligence company Glenigan, says trends in the construction industry are playing to Nixon Hire’s new strengths. There is significant demand for refurbishing or replacing older buildings in order to improve energy efficiency, he adds. 

According to Glenigan data, an estimated £129bn worth of construction plans in the UK were approved but not started in the year immediately before chancellor Rachel Reeves’ Spring Statement in March, when she pledged a total of £113bn in capital spending over this parliament.

“With the extra funding kicking in from April — increased capital funding for health, education, increased investment into the civil engineering side into renewables, upgrading the transmission networks and the water industry spend, it’s a massive increase they’ve been given for the five-year period,” Wilen adds. “It is going to be both politically and environmentally high on the agenda.”

A 2023 parliamentary environmental audit committee report said the built environment was responsible for a quarter of all UK carbon emissions, with construction accounting for about a fifth of that, according to industry body UKGBC. While much of that was due to the carbon-intensive production of materials such as concrete and steel, the emissions on construction sites also play a role and Nixon Hire can claim to have reduced these for its customers in a measurable way. 

“The next generation is already passionate about sustainability and the environment. It’s reshaping the UK, and we want to play our part in that,” says Cornett.

President Donald Trump’s attacks on US universities have opened up a rare opportunity for European business schools to attract talent once bound for elite American campuses.

The continent is drawing students and faculty from around the world who are unsettled by political turbulence in the US and the Trump administration’s policies, deans say. Washington has cut research funding and tightened student and work visa rules, while proposing limits on diversity programmes and international enrolments.

A “Trump bump” has been felt from Barcelona to Berlin. Reasons vary but overall applications to European business schools excluding the UK rose 11 per cent this year, while those to US programmes slipped by 1 per cent, according to the Graduate Management Admission Council (GMAC). UK schools have seen a sharp slowdown in international enrolments after the British government introduced visa changes.

European business school deans say that among the increased numbers they are attracting more students deterred from study in the US, including from other European countries, America and China. High tuition fees and doubts around post-graduation work options have also weakened the appeal of the US.

The GMAC survey, conducted between June and August 2025, came before uncertainty around recent visa policy changes, which analysts say could weigh more heavily on US demand in the months ahead. The proposed $100,000 H-1B work visa fee initially caused alarm, but the US government later confirmed that it will not apply to international students already in the country switching from F-1 study visas.

Even before President Trump’s return to power, the prospect of a second term was enough to sway some prospective students. Luis Dominguez, a Mexican former consultant who had MBA offers in the US from Dartmouth College and Georgetown University, opted instead for HEC Paris last year.  

“I would have hated to study in the US if Trump was president,” Dominguez says, pointing to visa uncertainty and the president’s barbs against universities, including Harvard. The president’s pushback against diversity programmes also hit home for Dominguez, who is part of the LGBT+ community and worked on diversity initiatives at his former employer, EY. “It feels scary to think of being in the US right now during this war against DEI,” he says. 

For French schools, the influx has brought new pressures. “It was a very competitive environment in France [this year]. There was aggressive discounting and students shopping around,” says Mark Smith, dean of programmes at EMLyon Business School. The school’s intake levelled off this year at 1,500 masters students after an admissions season in which applications rose but conversion rates dipped, flattening growth.

It feels scary to think of being in the US during this war against DEI

To the south in Italy, Milan’s Polimi Graduate School of Management saw student numbers rise 20 per cent this year. “We are seeing a clear shift: Europeans are more interested in staying in Europe than before,” says Sergio Terzi, associate dean for international relations, linking the change to waning enthusiasm for US study options.

Europe’s business school origins go back to the 1800s, but the US has long defined modern business education, pioneering the MBA and case-study method. That hierarchy is now under strain. “The US was a lighthouse — but less and less,” Terzi adds. 

The latest Business of Branding survey by education consultancy CarringtonCrisp shows the world’s largest economy slipping to third place among preferred study destinations, behind the UK and Germany.

“The US is expensive, that’s the issue,” says Andrew Crisp, the British consultancy’s owner. “You might in the past have said it’s affordable because I’ll get a good job in the States and the salaries help me repay that. If that is not possible, the maths changes.” 

The cooling US job market has made it harder to secure high-paying roles, raising fresh questions about the investment case for an American MBA.

“Historically, the top seven US MBA programmes have been the most preferred options because of their career outcomes and the enduring appeal of the American dream,” says US-based admissions consultant Stacy Blackman, noting that European graduates earn less on average, even as top schools edge closer to US pay levels. 

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Fresh competition from other regions is also growing. According to GMAC, overseas applications rose 26 per cent in India this year, and 42 per cent across east and south-east Asia.

Among those looking beyond the US is Jackie Dong, a Chinese MBA student at Germany’s ESMT Berlin, who previously studied in Boston and Los Angeles. She was discouraged from returning to the US by the political climate and growing unease over the treatment of Chinese students. US secretary of state Marco Rubio has pledged to “aggressively” revoke Chinese student visas.

“The US-China relationship has become increasingly tense,” Dong says. “The US is scrutinising international students more closely, because of their so-called political activity, or simply for being Chinese and seen as an outsider. They might even think you’re a spy.” 

Some Americans are also looking at options outside the US. “We’ve observed a steady increase in US students opting to study in Europe, many citing the open, more international environment as a key factor,” says Marc Badia, deputy dean of Iese Business School in Barcelona. Iese’s MBA intake rose by a fifth to 421 students last year, a level the school has maintained, with 88 per cent of the class international.

Rising interest does not always translate into enrolments. Nalisha Patel, regional director for Europe at GMAC, says: “We see the increase in applications, but it will be interesting to see what that means in terms of bums on seats.” 

Even so, the trend prompts the question of whether the centre of gravity in business education is starting to shift eastward from the US.

David Bach, president of IMD in Switzerland, says turning the recent surge in demand into lasting market share will require Europe to boost its economic competitiveness, a gap that has long persisted with the US. “If that happens, then indeed this could be a real structural [re]alignment in global management education,” he says. 

Even so, Bach, who spent several years at Yale, says Europe’s progress rests on foundations laid by the US. “It’s actually an opportunity because European institutions and those elsewhere have become quite strong,” he says. “We’ve grown up.”

• Wondering if Advanced Micro Devices (AMD) is really worth the buzz? You are not alone, and digging into the stock’s valuation could reveal some surprises.

• AMD’s share price has soared an impressive 77.6% year-to-date despite some choppiness, including a 4.2% dip over the past week and a 17.5% pullback in the last month.

• Much of this recent volatility comes in the wake of industry news about surging demand for AI-focused chips, as well as chip supply chain developments grabbing headlines. These factors have sparked lively debates about whether AMD’s growth story is only just getting started or if the stock is becoming riskier for new investors.

• Right now, AMD scores 2 out of 6 on our undervaluation checks, meaning there is more to explore in how investors are thinking about fair value. We will compare several valuation methods next, and stick around because we will show you an even better way to evaluate what the market may be missing.

Advanced Micro Devices scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

A Discounted Cash Flow (DCF) model estimates what a company is worth by taking its expected future cash flows and discounting them back to today’s value. For Advanced Micro Devices (AMD), this involves projecting the company’s future free cash flow (FCF) and determining the present value of that stream of cash.

Currently, AMD generates $5.6 billion in free cash flow. Analysts predict strong growth over the coming years, projecting FCF to rise to $30.9 billion by 2029. The projection extends over the next decade, with Simply Wall St extrapolating AMD’s FCF up to $79.8 billion by 2035. Analyst estimates are more concentrated in the upcoming five years, with the remainder of projections based on continuing trends.

Based on the DCF model, AMD’s intrinsic value is assessed at $397.54 per share. This is about 46.1% higher than its current market price, which may suggest the stock is significantly undervalued according to cash flow projections.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Advanced Micro Devices is undervalued by 46.1%. Track this in your watchlist or portfolio, or discover 926 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Advanced Micro Devices.

The Price-to-Earnings (PE) ratio is a widely used valuation metric for profitable companies like Advanced Micro Devices because it measures how much investors are willing to pay for each dollar of company earnings. For established tech businesses, the PE ratio helps capture both current profitability and future growth expectations in a single number.

A higher PE ratio typically reflects optimism about stronger earnings growth, while a lower PE can indicate either lower growth prospects or higher perceived risk. Comparing a company’s PE to its industry average and similar peers can help gauge whether it is trading at a premium or discount. However, this does not account for company-specific factors such as margin strength or risk profile.

Currently, AMD’s PE ratio is 111.4x, substantially above the semiconductor industry average of 35.8x and its peer group average of 65.4x. Simply Wall St’s proprietary “Fair Ratio” provides another perspective by estimating what a reasonable PE should be for AMD, taking into account the company’s earnings growth, industry dynamics, profit margins, market capitalization, and specific risk factors. For AMD, the Fair Ratio is calculated at 63.3x. This tailored measure is considered more precise than straightforward industry or peer comparisons because it reflects key fundamentals and the unique risk profile of AMD today.

Comparing AMD’s actual PE ratio (111.4x) to its Fair Ratio (63.3x) indicates that AMD’s shares are trading richly relative to what would be considered fair value given its profile and prospects.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1434 companies where insiders are betting big on explosive growth.

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a story investors construct about a company’s future, combining not only their estimates for revenue, profit margins, and fair value, but also the “why” behind those numbers. This reflects unique perspectives on industry trends, leadership, and risks beyond what a spreadsheet can capture.

Narratives link a company’s story to its projected financials and ultimately its fair value, transforming cold data into a living outlook you can actually test. On Simply Wall St’s Community page, millions of investors use these Narratives daily. No complex financial modeling is required, making them a smart, user-friendly tool for all levels of experience.

What makes Narratives especially powerful is that they update dynamically as new information comes in, like earnings surprises or shifting AI regulations. This helps you see instantly how the story and fair value change in real time. You can compare your Narrative’s fair value with the share price to decide whether it’s time to buy or sell.

For example, recent Narratives for Advanced Micro Devices range from a bullish view with a fair value of $230 per share, pricing in surging AI adoption and significant margin expansion, to a more cautious take at $136, highlighting export risks and margin challenges. Wherever you fall, Narratives help you anchor your decisions in your own perspective, not just the latest headline.

For Advanced Micro Devices, here are previews of two leading Advanced Micro Devices Narratives:

🐂 Advanced Micro Devices Bull Case

Fair Value: $276.76

Undervalued by: 22.7%

Revenue Growth Forecast: 32.9%

• Analyst consensus is that AMD has substantial tailwinds in AI, data centers, and adaptive computing. Recent partnerships and product momentum are boosting future prospects.

• Rising analyst price targets reflect optimism. However, potential challenges include regulatory risk, competition from Nvidia, and integrating acquisitions like Xilinx.

• Estimated fair value is significantly above today’s share price. Achieving this value requires strong revenue and margin expansion to materialize amid execution and macro risks.

🐻 Advanced Micro Devices Bear Case

Fair Value: $193.68

Overvalued by: 10.6%

Revenue Growth Forecast: 18.8%

• AMD’s growth in CPUs, GPUs, and AI chips drives its promise, but it still faces strong competition from Nvidia and Intel, as well as cyclical and macroeconomic risks in the semiconductor sector.

• Execution challenges, reliance on external manufacturers like TSMC, and geopolitical issues present meaningful near-term threats to growth and profitability.

• The narrative suggests the current market price may reflect over-optimism, especially if AMD cannot capitalize on projected AI and data center opportunities as swiftly or profitably as markets expect.

Do you think there’s more to the story for Advanced Micro Devices? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include AMD.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

November 27, 2025

NTT DATA Group Corporation

TOKYO and LONDON – November 27, 2025 – NTT DATA, a global leader in AI, digital business and technology services, has been named a Leader in the Everest Group Microsoft Modern Work Services PEAK Matrix^® Assessment 2025 (PDF : 343KB).

This assessment evaluated 20 service providers worldwide, offering a comprehensive analysis of their capabilities, market impact and strategic vision. The report focuses on Microsoft Modern Work Services, emphasizing the growing importance of this segment and highlights NTT DATA leadership in shaping the future of workplace transformation.

According to Everest Group, Leaders possess an exceptional ability to successfully deliver impactful services backed by strong global presence, deep domain expertise and sustained investments in technology and innovation. Everest Group highlights how Microsoft Modern Workplace solutions – such as Microsoft Teams and Microsoft 365 – have become a top choice for enterprises to enhance collaboration, productivity and employee experience, with providers delivering end-to-end ecosystem services.

NTT DATA’s core capabilities in Microsoft AI Workforce include:

• Driving employee engagement and productivity through modern workplace offerings
• Providing a robust suite of industry-aligned and contextualized IP and solutions
• Leveraging AI-based emerging technologies including support for Microsoft 365 Copilot and extensibility
• Delivering end-to-end Microsoft 365 engagements including consulting, deployment and managed services
• Supporting seamless and scalable Microsoft Modern Workplace environments within IT infrastructures

NTT DATA’s deep expertise in Microsoft AI Workforce enables enterprises to unlock value, enhance productivity and elevate employee experience. The company’s comprehensive suite of innovative solutions includes Smart AI Agent™ Suite, Solution Accelerator for Microsoft Azure Virtual Desktop, 365 Proof of Concept (PoC), Windows 11 Migration Solution Accelerator, and Microsoft 365 Management Consulting. The capabilities are backed with intelligent automation and agentic AI at the core, demonstrating NTT DATA’s commitment to delivering a seamless modern workplace environment.

The NTT DATA Workplace Smart AI Agent™ Suite – part of the NTT DATA Smart AI Agent™ Ecosystem – empowers enterprises to embed personalized AI workers into their digital workforce, creating a dynamic learning workplace where humans and AI collaborate seamlessly. These AI workers operate autonomously and adapt to evolving business needs to drive smarter and faster decision-making across the enterprise. By placing Agentic AI at the core of its Microsoft AI Workforce, NTT DATA enables organizations to unlock new levels of productivity, agility and innovation.

“NTT DATA’s Digital Workplace Services seamlessly connect people, platforms and processes to enable secure, modern workplace experiences powered by our Smart AI Agent™ Suite. The result is higher employee productivity and improved experience,” said Sujay Bhattacharya, Global Head of Digital Workplace Services, NTT DATA, Inc. “Being recognized for our vision and leadership in leveraging Microsoft AI Workforce technologies – including Microsoft 365 Copilot – is a powerful validation of our ability to deliver transformative, AI-powered solutions. Our strategic collaboration with Microsoft and our agentic AI-driven portfolio are helping clients unlock new levels of productivity, collaboration and business value across the modern workplace.”

“NTT DATA is a trusted strategic partner that is helping us drive workplace transformation and achieve our vision for a scalable, secure and efficient digital workplace,” said Joshua Zalen, CIO, Independent Health. “Thanks to their modern workplace capabilities, we are now better positioned to safely implement and derive value from Microsoft solutions including Microsoft 365, Intune and the broader modern workplace solutions. NTT DATA empowers us to unlock new levels of productivity, achieve cost savings, improve our security posture and increase automation within our organization, which has enabled us to remain a leading, nationally recognized plan for quality and service.”

NTT DATA’s strategic collaboration with Microsoft is a key factor in its leadership position in the Microsoft AI Workforce space. As a Microsoft AI Workforce partner and launch partner of Microsoft Copilot, NTT DATA is at the forefront of adopting Microsoft’s latest technologies and delivering innovation. The company also ranks as one of the top Microsoft Teams Voice providers, further highlighting the depth and strength of the company’s collaboration with Microsoft.

About NTT DATA

NTT DATA is a $30+ billion business and technology services leader, serving 75% of the Fortune Global 100. We are committed to accelerating client success and positively impacting society through responsible innovation. We are one of the world’s leading AI and digital infrastructure providers, with unmatched capabilities in enterprise-scale AI, cloud, security, connectivity, data centers and application services. Our consulting and industry solutions help organizations and society move confidently and sustainably into the digital future. As a Global Top Employer, we have experts in more than 70 countries. We also offer clients access to a robust ecosystem of innovation centers as well as established and start-up partners. NTT DATA is part of NTT Group, which invests over $3 billion each year in R&D. Visit us at nttdata.com.

About Everest Group

Everest Group is a leading global research firm helping business leaders make confident decisions. Everest Group’s PEAK Matrix^® assessments provide the analysis and insights enterprises need to make critical selection decisions about global services providers, locations, and products and solutions within various market segments. Likewise, providers of these services, products, and solutions, look to the PEAK Matrix^® to gauge and calibrate their offerings against others in the industry or market. Find further details and in-depth content at www.everestgrp.com.

Disclaimer

Licensed extracts taken from Everest Group’s PEAK Matrix^® Reports, may be used by licensed third parties for use in their own marketing and promotional activities and collateral. Selected extracts from Everest Group’s PEAK Matrix^® reports do not necessarily provide the full context of our research and analysis. All research and analysis conducted by Everest Group’s analysts and included in Everest Group’s PEAK Matrix^® reports is independent and no organization has paid a fee to be featured or to influence their ranking. To access the complete research and to learn more about our methodology, please visit Everest Group PEAK Matrix^® Reports.

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Lam Research (LRCX) caught investors’ attention after its recent earnings exceeded projections. Management also boosted its 2025 spending outlook for wafer fab equipment to $105 billion, citing stronger demand for AI-driven chip technologies.

See our latest analysis for Lam Research.

Lam Research’s impressive run is more than just a flash-in-the-pan rally. Following a notable office expansion in Oregon and a strong earnings beat, the company has seen its share price surge, with a 114% return year-to-date and a remarkable 119% total shareholder return over the past year. Momentum has accelerated recently as investors respond positively to Lam’s raised spending forecast for next year, even as export hurdles in China add some complexity to the outlook.

If Lam’s growth story has you looking for what’s next in tech, explore the sector’s innovation leaders through our See the full list for free..

With shares trading near recent highs and a fresh round of optimism driving expectations, the big question remains: Does Lam Research still offer value at today’s prices, or have markets already priced in all the future growth?

Lam Research’s last close of $155.14 is modestly below the most popular narrative’s fair value of $158.52, suggesting the stock may hold some room for upside. This consensus-based outlook combines moderate optimism with a close eye on sector dynamics and recent momentum.

Rapidly rising AI workloads and the associated need for higher storage, bandwidth, and processing power are accelerating the adoption of advanced chip architectures (such as gate-all-around, 3D NAND, and advanced packaging). This is increasing demand for Lam’s etch and deposition tools, supporting sustained revenue growth and robust order visibility.

Read the complete narrative.

Want to know what’s driving this valuation? The narrative is founded on bold projections for future growth in chip demand and the powerful impact of emerging technologies in Lam’s pipeline. Dive deeper to see what ambitious assumptions and fine-print details are pushing the stock’s fair value just above today’s price.

Result: Fair Value of $158.52 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, ongoing geopolitical tensions in China or a slowdown in end-market chip demand could quickly challenge the bullish case for Lam’s future growth.

Find out about the key risks to this Lam Research narrative.

While the consensus fair value suggests Lam Research is slightly undervalued, a scan of its price-to-earnings ratio (33.5x) reveals it is below both the US Semiconductor industry average (35.6x) and its immediate peers (37.1x). This hints at potential value. However, is the margin significant enough to warrant a second look, or do valuation risks still linger?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Lam Research for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 927 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

If the analysis above does not reflect your outlook or you want to take a hands-on approach, you can craft your own narrative in just a few minutes using Do it your way.

A great starting point for your Lam Research research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Don’t sit on the sidelines when fresh trends are moving markets. Use these dynamic stock ideas to seize your next opportunity before others even spot it.

• Unleash your potential for high income by targeting reliable payers within these 15 dividend stocks with yields > 3%. Strong yields and resilient businesses can make all the difference.

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• Step ahead of the crowd in tech’s hottest space with these 25 AI penny stocks. This highlights ambitious firms shaping the new era of artificial intelligence for explosive upside.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include LRCX.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

This is an audio transcript of the Behind the Money podcast episode: ‘KKR, Bain and private equity’s push into Japan’

[VULTURE TRAILER PLAYING]

Michela Tindera
What you’re hearing is a trailer from an old Japanese drama. It’s called Vulture, or in Japanese . . . 

[VULTURE TRAILER PLAYING]

Michela Tindera
My colleague Leo Lewis, the FT’s Tokyo Bureau chief, loves this. Hear how locked in he becomes when we watch this trailer together the other day.

Leo Lewis
(laughter) That is just magnificent, isn’t it? That’s brilliant. OK. Do you want me to comment on it?

Michela Tindera
Yeah, go ahead.

Leo Lewis
I mean, it was a big phenomenon at the time. It was the water cooler conversation in offices.

Michela Tindera
Vulture was about a foreign fund that exploits struggling Japanese companies. First, it was a TV show and two years later it was made into a film in 2009.

Leo Lewis
You know it, it had a primetime slot, but it was also thematically, it could not have been more on the minds of people going into their 9-to-5 jobs.

Michela Tindera
That’s in part because just a few years before this, some major American private equity firms had started to set up shop in Japan.

Leo Lewis
What’s in the trailer is a series of scenes that depict the perceived problem with foreign capital . . . 

[VULTURE CLIP PLAYING]

. . . which is that, you know, capital doesn’t care about the nature of Japanese companies and they’re with sort of stacks of cash being thrown across the floor. The look of the thing was a little bit like Barbarians at the Gate and kind of Wall Street and the idea that capital does kind of wicked things if it’s left unchecked.

[VULTURE CLIP PLAYING]

Michela Tindera
But fast forward to the present and our colleague David Keohane, who’s the FT’s Tokyo correspondent, says things are really different.

David Keohane
The easiest way to put it is that private equity is everywhere. Private equity has basically managed to present itself as a solution to some of the problems that Japan faces from succession planning to consolidation. It’s the world’s fourth-largest economy. And what you have now here is a cocktail that’s perfect for private equity with companies needing reform, government and regulators all pushing it and private equity ready to take them private en masse.

Michela Tindera
But even as private equity increases its influence in Japan, some in the country still worry about the knock-on effects of this growing trend.

Leo Lewis
The experience of companies and private equity in the United States in Europe has got a long track record, and it’s not necessarily a track record that Japan would like to see emulated in full on its shores. There’s not only tension with the idea of a foreign entity taking over a Japanese company, but I think also there’s the real idea out there that private equity stories don’t always end well for companies.

[MUSIC PLAYING]

Michela Tindera
I’m Michela Tindera from the Financial Times. After roughly two decades in the country, international private equity firms are finally becoming more of a fixture in Japanese markets. Today on Behind the Money, we’re talking about what’s changed in Japan to make this happen. And how private equities’ expansion might alter the country’s unique corporate ecosystem.

[MUSIC PLAYING]

David, Leo, welcome to the show.

Leo Lewis
Hello there.

David Keohane
Nice to be here. Thanks.

Michela Tindera
So first, let’s start at the beginning. When do private equity firms first make their way into Japan, and who are they?

David Keohane
You can probably date this back to kind of the early to mid-2000s after Japan experienced an extremely aggressive asset price bubble that then very dramatically burst, leaving a lot of distressed assets on the table. There were some kind of specialist firms that came into the market. Ripplewood very famously taking over kind of distressed financial assets. But the big guys we’re talking about here, the Carlisles, Bains, KKRs and Blackstones, they’re coming into the market around 2005, 2006, something like that.

Michela Tindera
When these firms first came into the country, how would you describe Japan’s economy and business culture at the time?

Leo Lewis
Yeah. So David alluded to just there, the 1980s asset bubble was a defining moment for Japan and for Japanese companies. They went from being literally at the top of the world to being something that was a constant source of concern that you weren’t sure whether companies were going to collapse. And in very simple terms, companies had gone into a kind of defensive mode. They had been very aggressive risk-takers. And what happened at the CEO level for quite a long time was that the predominant emphasis of your time as CEO would be not making a mistake. It wasn’t about advancing the share price a whole lot, it was just about not having a disaster.

Michela Tindera
Yeah, very risk-averse

Leo Lewis
Very risk-averse, but there was no upside to taking big risks.

Michela Tindera
Well, what else was happening in the Japanese corporate world when these big PE players showed up?

Leo Lewis
I think, one of the things that’s important to remember throughout today’s discussion is that public markets in Japan had gained a very, very strong reputation, which they maintain to this day. There is a true reputational, practical and psychological value to being a listed company, and private equity in a way was the antithesis to that, that private equity was there saying actually there’s a value in being not a public company, that there’s a value to being off the market and away from that.

Michela Tindera
Now we heard earlier how these firms weren’t exactly well received by the Japanese public at first with that show Vulture. But Leo, as a journalist, you were living in Japan back then as well, talk a bit more broadly about how private equity was received, you know, beyond just this TV show.

Leo Lewis
Well, it was primarily negative. In a lot of people’s minds, there was a kind of vulture element that these guys were coming in at a time when Japan was at its relatively weakest, and that this was therefore a kind of nakedly opportunist arrival on Japan’s shores. And so it was poorly received, and at the time it was quite difficult to find any positive media coverage in Japan. The financial media was simply sceptical of whether any of this was good for Japanese companies, and the mainstream media jumped on this with the idea that this was a kind of foreign arrogance and that this was just rude, that basically it was just insulting.

Michela Tindera
Now let’s jump ahead to 2025. It’s been several years since that show came out and since private equity firms first set foot in Japan. So how have things changed?

David Keohane
Well, one thing that’s just kept growing is how many publicly listed companies there are. Leo and I play a game sometimes in the office of looking up a corporate handbook and seeing if we can find a company that does x. Is there something that makes like lollipop sticks? There’s actually seven of them. How many funeral home operators are there? Quite a few. Japan has an enormous number of listed companies. Something we really should mention, it has like the same number of listed companies roughly as the United States.

From memory, I think the US has a GDP that’s like seven times Japan. So you get it. So if you’re a private equity firm looking at this, if you’re an investor looking at this, it’s great because you can basically, you have a strategy you wanna play, you can do it in Japan.

Michela Tindera
So it sounds like more companies, more investment opportunities. How has the private equity industry responded to this environment?

David Keohane
If you look at a chart of private equity deals over time, basically got a curve that goes very steeply up like very few at the start, those first years, and then it starts to creep up a little bit. And basically what you get is firms like Bain in particular, starting to buy companies that people have heard of. Domino’s in Japan, they bought that, I think it was around 2010, 2011. They buy Skylark around the same time, another kind of family eatery that like everybody in Japan would know. And from there they go deeper and deeper into the corporate establishment. I think the big deal around 2018 that really established these private equity companies as firms that could buy whatever they wanted at the very centre of Japan was Bain buying Toshiba’s chip business.

Michela Tindera
And who are these main firms that we’re talking about here at this moment? Is it Japanese firms? American firms?

David Keohane
Yeah. So there’s, I think there’s like 150 to 200 of them. So you have every large private equity firm you can imagine is here. So as we’ve already mentioned, like KKR, Blackstone, Bain, Carlisle. Then you’ve got kind of EQT, you’ve got Chinese Hong Kong firms, you’ve got firms from the Gulf. And then you have, you do have Japanese private equity firms, but those Japanese firms haven’t really gotten to the size where they can compete with the big international, particularly American private equity firms in this market.

So when you get into the really big carve-outs, with the exception perhaps of JIP, a Japanese firm which bought the rest of Toshiba, well, when you’re talking about the Hitachi, which sold a lot of business, Panasonic, which sold some and may sell some more in the future, those auctions, those sales processes are gonna be mostly a battle on price, and they’ve been and probably will be dominated by the big international private equity firms. They’re the guys who are really becoming dominant here.

Michela Tindera
So there’s more growth happening now. More deals are happening. Why is that the case? What’s changed?

Leo Lewis
So look, one of the reasons that this is happening now is the demographics, and that takes two forms. One is that founders of companies, often men, and often with large, substantial stakes in listed companies are reaching the end of their lives and they’re either estate-planning and working out how to transfer this to other members of their families, or they’re just looking at this and going, I need to get out. But the other, Japan has a very substantial labour shortage.

The labour market is shrinking and is in long-term decline. In other words, it’s not about laying people off. In many cases, it’s about arresting the exit of the workers that you have got or reskilling them. And these are actually things that private equity can do pretty well. And so if they’re going to use that capital to invest in productivity devices, labour-saving devices and so on, that’s probably no bad thing. And why wasn’t the company doing that anyway?

Michela Tindera
Well, and these firms, I mean, how do they operate in Japan? Is the playbook pretty much the same as how they operate in the US or the UK, or is it quite different?

David Keohane
Yeah, I think the point is that when people think about the US private equity playbook, Leo mentioned earlier, like Barbarians at the Gate. It’s less Barbarians at the Gate here and more private equity banker takes kind of old founder out for whiskey at jazz bar 12 times in order to get him to convince him that he should sell his company.

Leo Lewis
Yeah, I think the fear was that the winning bidder would end up completely restructuring, that there would be, you know, enormous job losses, that entire divisions would disappear. In actual fact, the low-hanging fruit is comparatively painless to extract. There are, you know, large real estate portfolios in many companies that can be sold and monetised without massive job losses. You know, there are IT upgrades that can be performed without really disrupting the overall sort of structure of the company. And I think it’s because they haven’t actually ended up really mauling corporate Japan in that way that they’ve also continued to kind of look like progress rather than looking like huge disrupters.

David Keohane
These guys are super, super nervous about giving the impression they will cut jobs. As Leo said, there’s extremely structural reasons. Firstly, the contracts aren’t as boilerplate over here. They’re much more bespoke. That’s what lawyers are saying because the number of deals hasn’t increased to the level where they can just kinda take a contract off the shelf and fill it in. But what is very consistent in those contracts are terms about we will not fire people over this amount of years.

Leo Lewis
Because in the end, that founder is gonna have to say, I’ve done this deal, but it’s not gonna be worse for you. And he has to be able to do that with a straight face. And you know, that matters a very great deal in Japan.

Michela Tindera
Now an interesting fact behind this growth of private equity and the increase in the number of private equity deals in Japan that you, David and Leo, have written about is that the Japanese government is really pushing for a more robust private equity industry. How does the government see this benefiting Japan’s economy?

David Keohane
The whole corporate landscape has changed in a way. You have a government that realises it wants to get its citizens investing in the stock market. To do that, it needs companies to actually be performing and need stocks to go up. So they need a catalyst. They’ve decided that they’re very much OK with private equity being that catalyst to being able to shake up companies, buy them, improve returns.

Leo Lewis
I think the government, I mean you alluded to this before, I think the government is concerned that the public markets have not been, or that Japanese companies have not been very good allocators of the nation’s store of capital, and that the economy hasn’t done catastrophically badly. But it could have done a great deal better if those companies had been different allocators of capital. What the government is saying is we should be open to the idea that there are people out there who do know how to allocate capital more efficiently, and that that is a net good thing for Japan.

David Keohane
Again, in an ideal world where private equity can offer is a consolidation mechanism, returns go up. Companies get more pricing power as inflation picks up. That’s great. People get more excited by the stock market. And we should mention in our reporting, an interesting moment was former prime minister Kishida speaking at a KKR dinner quite recently. You know, maybe a risk they wouldn’t have taken when private equity first entered the market.

Michela Tindera
So speaking of risk, are there risks or concerns that you’re hearing from sources about private equity expanding in Japan, and if so, what are those?

David Keohane
In writing of private equity, particularly, we’re talking to government sources. We ask this question all the time: So are you monitoring for excess? What would that excess look like? You know how we know when things are going too far. We get the sense that from the kind of government regulatory point of view that we’re probably a few years away from real concern materialising. Now, what you think that concern will look like depends on your view of private equity. I mean, private equity in the US is now one of the biggest employers there. And you know, we wrote recently that as one Japan expert we spoke to Alicia Ogawa, said, it is entirely plausible to think that in the coming years, private equity could own 30 to 40 per cent of the SME market, the small and medium-sized enterprise market, kind of mid-cap firms.

What does that mean for Japan? What does that mean for Japan’s public markets? Japan has this amazing depth of expertise. I mean, these founders are sitting at the top of like semiconductor material companies, advanced manufacturing companies. These guys deeply care about their products. And one of the issues with the kind of the idea that, you know, you just find another person to run the company, you sell it to private equity, is that you run the risk of, and I’m not saying this is definitely happening, I’m just saying the risk is there of hollowing out something quite valuable and unique to Japan.

Leo Lewis
I think one of the things that is a risk that is flagged, not so much talking to the government, but just generally, is that the pool of experts on whom private equity depends for parachuting in people and so on, the domestic Japanese pool is not enormous and that if the deal numbers pick up and pick up and pick up, I think you are gonna see quite intense competition for the people that can do this thing in a way that perhaps in the US you’ve got this much deeper pool of consultants and so on that have got that kind of experience. So that I think is the only thing that I would add to the list of concerns that David outlined.

Michela Tindera
So from the perspective of these private equity firms that have entered into Japan and expanded, it seems like they are playing a long game here. Is their experience in the market paying off for them so far?

David Keohane
I think you’d have to say yes. I think careers are being made here. You know, the guys who built up Japan experience and are now deploying this capital are rising to the top of their firms. I think also if you look at returns data, and I do think this stuff is patchy and it’s hard to really discern precisely what each firm is doing, particularly the non-listed ones. I think Japan is performing at or better than any other major market.

What I would say though is that the question of if it is paying off will only really be clear in a few years time because the bigger, more frequent deals are happening now. The market, it is a rising market that makes things easier and you know, the exits of these companies in the coming years will be the real test. We don’t know how that’ll go yet.

Michela Tindera
Yeah. So what are you both watching for and expecting going forward?

Leo Lewis
I’ll just have one observation, which is that, first of all, I would preface this by saying I think that the interest in doing deals in Japan is simply going to get stronger. This resonates with something that David and I first started to pick up on earlier this month, and that is that Japan’s private equity scene has been a big beneficiary of the fact that for at least a year now, maybe a bit more, China has been off-limits, really. They haven’t seen a horizon on which it’s going to be easy to get back in to China at scale for a whole series of both domestic US reasons, geopolitical reasons, as so we know. They’ve got an awful lot of dry powder and capital that needs to be deployed.

Japan has been the answer for a lot of them to the question of, what on earth are you gonna do in Asia? Where are you gonna deploy this capital if you can’t do it in China? And I think we just started to hear partly because of Trump’s visit to Asia and you know, the sort of progress perhaps on a trade deal between Beijing and Washington that you just started to hear noises about, well, maybe some of these big private equity firms are gonna look back at China and I don’t make any predictions of that, but I do wonder whether the scene could go back to a sort of pre-2020 norm where there was a lot of deployment of capital in China and Japan was there as a sort of, as a kind of wild card opportunity. But I leave it to David to make the better prediction what will happen in Japan itself.

David Keohane
That was a good prediction. I dunno what’ll happen. I think on a long enough timeline there will be another big blow-up. There’s been one or two before, but the market has moved past them to a large degree. And, you know, the reaction to the next big blow-up from regulators and government will be telling, will probably shape what private equity will do afterwards.

I think it’s also probably true that as private equity goes further out of Tokyo, the question about finance as a tool or a good in itself will become ever more important. If finance is there to strengthen Japanese corporates, then I think it can continue to grow. I would like to think that we’ll land somewhere in the middle away from the excesses of private equity in some markets and away from where Japanese corporates were maybe far too comfortable. I think that’s also where the Japanese government wants it to be.

But as Leo said, there’s this massive pressure to deploy, deploy, deploy, and if you’re out drinking with private equity guys. There’s occasionally a slight mania where even they kind of admit like, we can’t get off the hamster wheel. We gotta keep doing it. So as I said, there will be another big incident, big blow-up, and from then we’ll have to see where it goes.

Michela Tindera
Well David, Leo, thanks for coming on the show.

Leo Lewis
Thank you very much for having us. Thank you.

David Keohane
Thanks so much.

[MUSIC PLAYING]

Michela Tindera
Behind the Money is hosted by me, Michela Tindera. This episode was produced by me and Saffeya Ahmed. Fact-checking by Simon Greaves, sound design and mixing by Sam Giovinco. Original music is by Hannis Brown. Topher Forhecz is the FT’s acting co-head of audio. Thanks for listening. See you next week.

Sunnah Baek
sunnah.baek@hyundai.com
Global PR Contents · Hyundai Motor Company

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•  Electricity consumption combined for Hyundai INSTER 42 kWh (15” steel/alloy rims) with 2WD in kWh/100 km: 14.3; CO2 emissions combined in g/km: 0 (WLTP); CO2-class: A

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•  Electricity consumption combined for Hyundai INSTER 49 kWh (17” alloy rims) with 2WD in kWh/100 km: 15.1; CO2 emissions combined in g/km: 0 (WLTP); CO2-class: A

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