Bain Capital is stepping up private equity deals in Japan, bringing its investment tally to more than $40 billion as the buyout giant boosts its presence in the world’s third-largest economy.

The U.S. firm is on a buying spree, sealing a multi-billion dollar deal last month to acquire Hitachi Ltd.’s metals unit, while it is involved in a bidding war for Toshiba Corp. Bain is also hiring more people in Japan as it prepares to open an office in Osaka — home to a number of high-profile technology companies.

The expansion underscores a significant shift in Japan Inc.’s sentiment toward buyout firms following years of a frosty reception. Bain, along with Carlyle Group Inc. and KKR & Co., is increasing its footprint in the country as competition heats up to win deals from Japanese businesses undertaking overhauls.

Hitachi Metals Ltd. is “another example of private equity coming of age in Japan,” David Gross-Loh, managing director at Bain, said in an interview. “The raw size of the opportunity is very large.”

A consortium led by Bain succeeded in its tender offer for Hitachi Metals shares last month, clinching a stake for about 332 billion yen ($2.3 billion). That’s after Hitachi agreed to sell its shares to the group last year for 382 billion yen. Bain said it will proceed to take the metals maker private as planned.

Gross-Loh said the deal was significant “in its scale and its complexity.” Hitachi has global leadership in specialty steel products used in industries across autos, electric vehicles and consumer electronics, according to Gross-Loh. The plan is to “invest heavily” in such areas and scale up the business, he said. He cited an initial public offering as the most likely exit strategy.

With at least 25 Japan deals since it entered Japan in 2006, Bain is no longer a stranger to the country’s corporate world. Now some businesses are even knocking on its doors for help, which Gross-Loh says was “never ever the case” in the early days.

“There’s been tremendous potential in Japan for the private equity market for decades, but not everything has been in place to facilitate that” in the past, he said. “That’s changed, dramatically.”

Gross-Loh counts the acquisition of restaurant-chain operator Skylark Holdings Co. as one of his most memorable deals that helped change Japanese companies’ perception of Bain and private equity. The firm acquired the struggling company in 2011, turned it around and listed it in 2014, exiting in 2017.

“Skylark was a very pivotal deal for us and for the private equity market in total,” Gross-Loh said. “It was a success story.”

Toshiba is up next in the pipeline of deals eyed by global private equity giants. Last month, the Tokyo-based company granted a consortium led by Japan Industrial Partners Inc. preferred bidder status for a buyout, according to people with knowledge of the situation. State-backed investment fund Japan Investment Corp. is leading a rival bid, with investors such as Bain and MBK Partners in talks to be involved, Bloomberg News has reported.

Bain declined to comment on Toshiba. 

Japan hasn’t been immune to a slowdown in private equity this year, with the number of buyout deals falling to 113 this year through October, from 186 for all of 2021, Preqin figures show. The global industry is facing challenges including rising borrowing costs, difficulties raising cash from cautious investors, and struggles with exiting during a stock-market slump.

But Bain is taking a long-term view on Japan, where it now has more than 50 employees.

“We’ve expanded our team quite a bit,” Gross-Loh said. “Now that this has been validated that it works, you’re almost dealing with a huge backlog of opportunity that’s been there for a long time.”