Japan Post Bank targets $76.5bn alternatives portfolio

Exposure to risk assets including alternatives will grow from 40% of the overall portfolio in 2018 to 45% in 2021, according to the group's latest management plan. This will coincide with a reduction in exposure to Japanese government bonds from 61% to 55%. Total investment in risk assets is projected to increase by 10% in the next three years to JPY 87tn.

It comes as Japan Post Bank progresses a recently announced partnership with Japan Post Insurance that will see the LP ramp up its direct investment activity, mostly in partnership with GPs. The new entity, Japan Post Investment Corporation (JPIC), will have initial funding of JPY 120bn held in a fund structure and be 50% owned by Japan Post Bank. Japan Post Insurance will own 25% and the management team will hold the remainder.

It is not clear to what extent Japan Post Bank's increased exposure to alternatives will be driven by JPIC. The five-year vehicle is expected to allocate 60% of its total corpus to buyout deals, with 30% going to growth-stage technology investments, and 10% to special-situation opportunities. Buyout targeting will focus on business realignment, succession planning, and restructuring, and will be primarily geared toward domestic companies.

Japan Post Bank has indicated that pursuing alternative investments was one of its key initiatives for the 2019 financial year. As of March, its alternative assets under management totaled approximately JPY 1.5tn, compared to JPY 607bn at the same time last year. The firm's total investment assets increased marginally during the year to JPY 207.7tn.

This article was originally published in Unquote sister publication AVCJ

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