The Rise of Bank‐Related Corporate Revival Funds
This chapter explores the dramatic growth of corporate revival funds in Japan. These funds are made up of private equity and represent an alternative to main bank intervention in promoting corporate restructuring. Moreover, corporate revival funds have contributed to the reduction of non-performing loans in the banking sector. These funds now play an active role in promoting M&A activities. Many of these emerging funds specialized on corporate revival are, in fact, closely related to Japanese banks. While revival funds were nearly all managed by foreign companies before 2000, new government related funds have also emerged, such as the Industrial Revitalization Corporation fund. This development raises questions as to how bank funds' activities are distinct and may complement traditional forms of bank monitoring over client firms. The chapter argues that a potential merit of bank related funds is to diminish moral hazard problems by separating rehabilitation activities from the banks.
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