Merrill Lynch & Co. establishes a buyout unit in Japan to get access to the lucrative Japanese buyout market where other firms have been able to have a resounding success. Merrill unit will be run by Terutomo Mitsumasu from Shinsei Bank Ltd. who will be accountable to Nathan Thorne, Merrill’s head of global private equity.

Companies like Ripplewood Holdings LLC and Goldman Sachs Group Inc have been able to cash in nice returns in Japan that accounted for only under 2% of the $180 billion global buyout market but scored the highest return.

``Successful exits by the likes of Ripplewood and access to cheap funding will lure more of the big-name buyout firms and securities firms to set up a dedicated business focusing on Japan,’’ said John Sequeira, a Tokyo-based partner at Bain & Co.. ``There’s also a willingness by Japanese companies to sell assets.’’

Japan was able to get back to growth in the second half of 2004 after a decade of recession. The nation received $120 billion from foreign investors who bought Japanese companies and assets in 2004, while the US obtained $1.2 trillion.

The group led by Ripplewood and including Goldman and Newbridge Capital LLC enjoyed a fourfold return on their investment in Japan Telecom Co. last year.