Will the MBK–Makino Deal Become a Nightmare for Foreign PE Funds? Take aways from Japan's First FDI

Authors:

Haseru Roku

ARTICLE6 July 2026

Will the MBK–Makino Deal Become a Nightmare for Foreign PE Funds? Take aways from Japan's First FDI Block in 18 Years

I. Overview

On April 22, 2026, Japan's Ministry of Finance ("MOF") and Ministry of Economy, Trade and Industry ("METI"), acting under the Foreign Exchange and Foreign Trade Act (the "FEFTA"), issued a cease-and-desist recommendation in connection with the proposed acquisition of Makino Milling Machine Co., Ltd. (TSE: 6135, "Makino"), a major machine tool manufacturer, by MM Holdings Inc. ("MMH"), a vehicle of MBK Partners, an Seoul-based private equity fund. This is the first publicly disclosed cease-and-desist recommendation since the 2017 amendments to the FEFTA took effect—and only the second stop recommendation under the FEFTA since the 2008 Electric Power Development Co. (J-Power) case, occurring approximately 18 years later.

The market impact of the recommendation stems from the fact that it disrupts two long-held expectations. First, since the regime of corrective orders to ensure investor compliance with mitigation was introduced in 2017, it was widely believed to be sufficient to resolve national security concerns, making formal government intervention all but obsolete. Second, MBK Partners, as a Korean-based PE fund, was not viewed as falling within a high-risk category from an investor-attribute perspective. Nevertheless, the regulators ultimately blocked the transaction by issuing a cease-and-desist recommendation.

This case is of significant precedential value for foreign investors planning investments in Japan—particularly for foreign PE funds that have recently been actively pursuing M&A in Japan. While an earlier alert provided a general overview of the case itself^[1], this newsletter summarizes the key lessons that foreign PE funds should take away from this case.

View original article here.

Author: Haseru Roku (Partner)

Endnote

^[1] Corporate Legal Update No.5/ International Trade Legal Update No.6 "First-Ever FDI Suspension Recommendation Under Japan’s Post-2017 FEFTA Regime" (May 2026)