Japan’s Government Pension Investment Fund eyes infrastructure

Infrastructure is a major focus of Japan’s Government Pension Investment Fund (GPIF) according to the fund’s president.

In a meeting with an Australian funds management delegation, including the Financial Services Council (FSC), Norihiro Takahashi last week said infrastructure is a key part of GPIF’s alternative asset strategy.

Takahashi told the delegation of Australian government officials and fund managers, including AMP Capital and Aberdeen Asset Management, that GPIF was primarily interested in brownfield, core infrastructure.

The head of the world’s largest pension fund said that the focus would be on developed countries. He also noted there was keen competition for infrastructure assets around the world, including in Australia.

IPE Real Assets understands that the Japanese pension fund has already had discussions with specialist Australian infrastructure fund managers.

Carla Hoorweg, a senior policy adviser with FSC, said Takahashi stressed that GPIF will be a long-term infrastructure investor.

Takahashi spoke of the pension fund’s plan to allocate up to 5% of its capital to alternative assets to be invested in private equity, infrastructure and real estate. GPIF outlined its strategy on alternative assets in April this year. At the end of fiscal 2016, the value of GPIF’s investment assets was ¥145trn (€1.08trn). 

Hoorweg said GPIF was looking for companies to help with offshore assets. “They see a strong role for asset managers to manage portfolios for them,” she said.

Sally Loane, the chief executive of FSC, told IPE Real Assets that Takahashi had indicated that foreign managers could register their interest to manage GPIF money.

“There are certainly a very a large amount of assets available for fund managers to manage on their behalf. This is very encouraging.”

She added: “While GPIF is obviously very big, there are other pension funds and institutional investors in Japan.”

Since an April announcement, GPIF has received applications from some 300 global fund managers. GPIF said that in the first instance, it is likely to invest through fund-of-funds managers.

The delegation was told that GPIF plans to introduce a variable fee structure for managers who can produce alpha returns.

Loane said Takahashi spoke about the importance of environmental, social and governance (ESG) factors and stressed that it was a focus of GPIF. 

“This is because he said GPIF has come under much public scrutiny in the last few years,” she said. ”They need to be transparent and ESG is also an important factor for sustainable growth.”

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