Japan's GPIF, the world's largest pension fund managing $1.16 trillion in assets, plans to increase investment in private equity and infrastructure projects in 2017 after first hiring outside managers to handle such deals.
The Government Pension Investment Fund (GPIF) could also soon start investing in real estate to boost returns, raising the allocation of so-called alternative assets in its portfolio from 0.04 percent, President Norihiro Takahashi said in an interview.
"I hope to hire a consultant by spring, hopefully to hire gatekeepers by summer and to invest in funds of funds this year," Takahashi said, referring to a multi-manager investment strategy whereby fund managers - or so-called gatekeepers - invest in funds managed by others.
GPIF can invest up to 5 percent of its portfolio - 132.8 trillion yen ($1.16 trillion) at September-end - in private equity and infrastructure, but the vast majority is in to Japanese government bonds (JGBs) and domestic stocks. Because of GPIF's size, any shift in strategy would be a boon to private equity firms and could mean billions of dollars in additional capital for them to deploy around the world. Any new investments would likely be in assets outside of Japan because of the lack of opportunities at home, Takahashi said.
"I really would like to buy Japanese assets," he said. "We have a huge amount of money ... but in Japan there are just a few deals in infrastructure or private equity."
Takahashi and Chief Investment Officer Hiromichi Mizuno have met other institutional investors including Canada Pension Plan Investment Board (CPPIB) and Singaporean sovereign wealth fund GIC Pte Ltd. GPIF could make joint investments with such funds in the future, Takahashi said.
"We would like to first do fund-of-funds type of investment and second, our next stage, we would invest through these special projects with other big investment funds like CPPIB or GIC to join us and co-invest in big projects," he said. GPIF posted gains of $20.9 billion in the fiscal second quarter ended in September, buoyed by gains in global equity markets.
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