Japan’s Government Pension Investment Fund (GPIF) could be set to commit up to 6.5 trillion yen (US$57.8 billion), or 5% of its AUM, to US infrastructure projects as part of a yet-to-be-introduced economic cooperation package between the US and Japan, which will be discussed in Washington this week, according to Nikkei Asia Review.
Under the initiative, GPIF would purchase debt issued by American corporations to finance infrastructure projects.
The move comes in advance of Japan Prime Minister Shinzo Abe’s scheduled visit to meet US President Donald Trump on February 10 in Washington to discuss an economic cooperation package that could generate up to 700,000 American jobs worth US$450 million, says Reuters.
GPIF President Norihiro Takahashi, however, dismissed talk of the fund’s investment decisions being politically-motivated, claiming that the pension had always placed its members’ interests as its top priority.
“The GPIF has been managing the reserve assets, including infrastructure investment assets, solely for the benefit of pension recipients from a long-term perspective, and the principle remains unchanged. GPIF will maintain the principle independently from the government,” Mr. Takahashi said in a statement.
He also refused to confirm any details on the supposed economic cooperation plan between Japan and the US, stating that the GPIF has not provided any information with regards to its infrastructure investment. The GPIF has been striving to scale up its allocation to alternative assets in a bid to boost its investment return, with infrastructure being one of the niche markets it has yet to explore.
According to Reuters, the pension currently allocates about 0.04% of its AUM to alternative investments, but aims to raise its position in private equity and infrastructure by up to 5% by the end of September this year.
According to its latest quarterly results, GPIF succumbed to a loss of 2.12%, or 2.86 trillion yen, in the second quarter ended September 30, 2016, reducing its total AUM to approximately 132 trillion yen from about 135 trillion yen in the corresponding period a year earlier.
