HONG KONG/TOKYO (Reuters) – Bain Capital is planning on further ramping up its dealmaking in Japan after it came out on top in the recent battle to purchase Toshiba’s semiconductors arm and as it bids to buy out Japan’s third-largest advertising agency, Asatsu-DK (ADK).

In making further acquisitions, the Boston-based Bain would cement its position as one of the most active private equity firms in Japan and help to break down a corporate culture that has been mostly hostile to foreign investors.

“Japan is a hard market. It takes years to build teams, relationships, credibility,” said David Gross-Loh, who is Bain’s co-head of Asia and is in charge of its business in Japan, in an interview. “I wouldn’t be surprised that five years from now we’ll have twice as many deals as we do now.”

Japan’s private equity market is small relative to its economy, the world’s third largest. This year, though, the Toshiba acquisition has pushed private equity-backed deals in Japan to a record $22 billion – more than double 2016’s $8 billion, according to Thomson Reuters data.

From 2007 to 2016, some 30-40 buyout deals on average were struck annually with slightly fewer exits each year, according to data provider Preqin. And both deals and exits have been worth a fraction of those done in China every year.

Yet this year has seen a pick up in interest, industry sources say, in part thanks to significant volumes of cash raised in 2016 as funds look to Japan. They are hoping to cash in on demographic shifts — such as the nation’s aging population – changes in corporate governance standards and a more active initial public offering market allowing for future exits.

Bain led a group of investors, including Apple, SK Hynix <000660 KS>, Dell, Seagate Technology Plc and Kingston Technology that agreed to pay $18 billion for the Toshiba chips business after a mammoth bidding battle.

FORGING TIES

Bain is one of several global private equity firms that opened offices in Japan before the global financial crisis, but it has bet on its own team to forge relationships, rather than rely on banks or advisers – a slower process.

And American rivals have also piled in. KKR & Co is looking to deploy more money in Japan after completing a string of investments, while Carlyle Group targets companies in the upper-mid size with its Japan fund, while seeking larger deals with its funds in other global regions.

Another global name, Blackstone Group, will remain focused on real estate in Japan, a person familiar with the firm said.

But Bain has been ahead, striking two of Japan’s five largest private equity-backed M&A deals, with Toshiba the biggest. KKR’s $4.2 billion acquisition of auto parts maker Calsonic Kansei Corp is the second largest.

Gross-Loh said that Bain is able to catalyze growth at Japanese domestic businesses that were stable and well-managed but weren’t exposed to global rivals and therefore not as competitive as they could be.

Both Bain and Carlyle last year participated in the high-profile auction of Takata Corp, which filed for bankruptcy in June after its air bags were linked to deaths and injuries.

According to people familiar with the deal, Bain is part of the winning bid for Takata, led by Chinese-owned U.S.-based Key Safety Systems. Bain declined to comment on Takata.

BIG IN JAPAN

In a decade, Bain has invested in a wide range of companies in Japan, from hot spring chains, wind farms to a mushroom growing business. Bain invests in Japan out of its Asian funds and sometimes use dry powder from its global funds for larger transactions – such as the Toshiba deal.

One of its most lucrative deals in Japan was a $67 million investment in Domino’s Pizza Japan in 2010, which as of May this year generated an internal rate of return of 156 percent, according to data from Centre for Asia Private Equity Research.

Bain has been patient.

It started talking to the corporate level of Toshiba about seven years ago, while discussions around their semiconductor business started more than two years ago – long before the crisis that prompted the nuclear-to-laptops group to sell out.

It separately spent three years building the relationship with ADK, one of the only three advertising agencies in the country that has access to Japan’s dominating TV networks.

But it is not guaranteed success every time.

Both Toshiba and ADK deals are yet to be completed, and Bain’s buyout offer for ADK has been opposed by the agency’s largest sharehoders.

“As global funds like KKR and Bain are getting bigger, they can allocate more cash to Japan,” said Sam Takata, head of private equity investment at Tokio Marine Asset Management.

“That means the market will become more competitive and firms will have to try more difficult deals to build up their track record.”