Japan Post Bank Co Ltd (Japan Post Bank) and Japan Post Insurance Co Ltd (Japan Post Insurance), subsidiaries of state-owned postal agency Japan Post Holdings, are setting up a private equity (PE) unit that will invest primarily in domestic companies.
The PE unit, known as Japan Post Investment Corporation (Japan Post Investment), is scheduled to be established on February 9 with stated capital and capital reserves totalling 1.5 billion yen (US$13.71 million).
Japan Post Bank and Japan Post Insurance will own 66.7% and 33.3%, respectively, of Japan Post Investment.
Japan Post Group is delving into PE as part of its plan to raise the long-term target for alternative investment to 3% of its portfolio. It’s not clear what proportion is currently invested in alternatives.
Japan Post Investment is being created to “implement sophisticated asset management for revenue growth, a key priority laid out in the Japan Post Group Medium-Term Management Plan”, Japan Post Bank and Japan Post Insurance say in a joint statement on January 30.
The management plan outlines objectives for Japan Post Group to evolve into a “total lifestyle support corporate group”, including pursuing greater profitability and improving productivity.
According to the statement, the PE unit “will conduct activities focused primarily on companies in Japan in order to drive further revenue growth through private equity investment”.
Japan Post Investment “will form new funds and supply risk money through those funds primarily to finance buyout deals in Japan including business realignment, succession and rehabilitation” and “will support the growth of business enterprises by encouraging investment in technologies that could become Japan’s core industries and in start-up companies that are in a phase of full-scale business expansion”, it says.
The PE unit “will make investment decisions based on assessments of commercial viability and provide management support to portfolio companies”, the statement adds.
Japan Post Bank did not have any exposure to alternative assets as at March 31, 2017, while Japan Post Insurance had allocated 6.6 trillion yen or 8.3% of its total investments to “other” non-plain-vanilla asset classes.
