By Makiko Yamazaki
TOKYO (Reuters) -A group of Japan’s ruling party lawmakers on Wednesday called on the country’s top public pension fund GPIF to expand investment in domestic private equity and venture capital funds to strengthen the domestic private asset investment chain.
Global private equity firms such as KKR and Bain Capital have thrived in Japan due to the country’s corporate governance reform, rising shareholder activism, and the government’s push for industry consolidation.
But the presence of Japanese private equity firms has been limited so far, with government-backed fund Japan Investment Corporation (JIC) often the only domestic non-strategic bidder in multi-billion-dollar deals.
The call for the Government Pension Investment Fund (GPIF) to step up as well came in a proposal presented to Prime Minister Shigeru Ishiba from a group of lawmakers looking at the issue, the aim being to make sure that profits from such investments remain in Japan.
“We always hear the likes of KKR and Bain help big companies overhaul themselves, but profits derived from such restructuring go to U.S. and Canadian pensions (which invest in those global private equity funds),” Fumiaki Kobayashi, a lawmaker and key member of the group, told reporters.
Specifically, the group said in its proposal that GPIF should boost its alternative investments, including domestic private equity and venture capital.
Domestic private equity funds should also “get involved in large-scale mergers and acquisitions,” Kobayashi said.
Alternative assets such as private equity, property and infrastructure account for just 1.6% in GPIF’s massive 258.7 trillion yen ($1.82 trillion) portfolio, far short of a 5% limit.
Former Prime Minister Fumio Kishida launched the policy group last year with dozens of lawmakers from the ruling Liberal Democratic Party to continue his key policy drive to beef up the country’s $5 trillion asset management industry.
($1 = 141.7600 yen)
(Reporting by Makiko Yamazaki; Editing by Tom Hogue)
