By George Chen and Wakako Sato
Sources with direct knowledge of the matter told Reuters that the closure of its Tokyo office was mainly due to lack of deal flow in Japan's private equity markets.
"It's a natural thing if there are not too many deals for you to do," said one of the sources.
The closure of MLGPE's Tokyo office comes after many of its rivals in the region have closed or cut back their Asian operations to save costs as deal flows have withered.
A Merrill Lynch spokesman in Tokyo confirmed on Tuesday the closure of MLGPE's Tokyo office. The Tokyo office was opened in mid-2005, the spokesman said but declined to comment further.
MLGPE, founded in 1996, makes investments globally, with focus on the United States, Europe, Japan, China, India, Latin America and Australia, according to its company website.
In Asia, only one investment was completed by MLGPE -- Tongjitang Chinese Medicines Co, a traditional Chinese medicine maker -- and most of its deals were made in the Americas and Europe in the past few years, Merrill Lynch's website shows.
MLGPE's investments typically range from $250 million to $750 million, according to the website.
Except Tokyo, which used to have about 10 staff, all other regional and country offices of MLGPE are operating normally, according to the sources, who declined to be identified due to the sensitive nature of the matter.
Last week, Asia-focused private equity firm Unitas Capital, formerly known as CCMP Capital Asia, said that it has closed its Tokyo office, to focus on deal opportunities in the rest of the region.
More hedge funds and private equity firms are likely to trim or shut their Asian operations as the financial crisis forces a retreat back to their home markets in the West, industry experts told the Reuters Private Equity and Hedge Funds Summit in Hong Kong last month.
Merrill Lynch was one of the biggest U.S. investment banks and was acquired by Bank of America on Jan 1.
Besides MLGPE, which focuses on long-term growth enterprises, Merrill Lynch also manages real estate investment funds in Asia.
(Editing by Muralikumar Anantharaman)