According to Nikkei, Polaris Capital Group plans to establish a private credit fund as early as the end of fiscal year 2026, expecting to raise approximately 100 billion yen (about US$630 million) from institutional investors such as life insurance companies and pension funds, potentially becoming one of the largest private credit funds in Japan.
In Japan, financing from non-bank institutions is becoming a new channel for companies to obtain funds, leading to a surge in private credit funds. While increased M&A activity has driven up demand for funds, large banks, traditionally major lenders in Japan, are facing a bottleneck in their lending capacity: as of the end of March 2026, their loan-to-deposit ratio reached 51%, an increase of 1.5 percentage points from five years ago, exceeding the 50% mark.
Another investment firm, Topaz Capital, also plans to establish a private credit fund with a size between 70 billion and 100 billion yen and has already begun fundraising. The company plans to invest a total of up to 300 billion yen in corporate loans through its existing and new funds.
Both Polaris and Topaz will primarily provide financing for M&A transactions. Polaris will focus on subprime loans and consider acquiring corporate loan assets from large banks. Topaz plans to provide conventional corporate loans for capital investments and other purposes, as well as financing for real estate acquisitions.
Large banks typically offer loan rates of around 3% to 4%, while private credit funds, due to higher funding costs, generally offer rates between 4% and 6%.
