Japan Post Bank’s PE portfolio grows by almost $7bn

The ¥229.6trn institution aims to pump ¥10trn into alternative investments by the end of 2026.

Japan Post Bank’s private equity portfolio grew by ¥1 trillion ($6.7 billion; €6.8 billion) over the past year.

The ¥229.6 trillion bank’s private equity fund investments reached ¥3.2 trillion as of March 2022, up from ¥2.2 trillion the prior year, according to the Japan Post Bank Annual Report 2022. Its alternatives portfolio more broadly grew by 52 percent to ¥6.4 trillion over the period, including ¥2.6 trillion of real estate funds and ¥600 billion of direct lending, infrastructure debt and others.

JPB has set itself the goal of allocating ¥10 trillion to alternative investments by the third quarter of 2026, according to its latest Medium-Term Management Plan, published last year.

Norito Ikeda, director, president and representative executive officer of JPB, said in the report that private equity is an appealing asset class given the “harsh competition” in Japan’s debt market.

“The rationale for entering this [debt] business is therefore difficult to find,” he wrote.

“For this reason, Japan Post Bank has long focused on providing funds through private equity fund investments and other means. Concentrating our efforts largely on limited partner… contributions that invest mainly in funds, we have garnered considerable know-how and expertise. In addition, the bank entered the general partner… business, which entails a broad spectrum of activities through to fund operations and management, through its subsidiary Japan Post Investment Corporation.”

Private equity contributed to an increase in JPB’s interest and dividends on securities, which climbed 14.7 percent to ¥1.33 trillion in the year to 31 March. “This increase mainly reflected an increase in interest on foreign bonds, investment trusts and private equity funds,” the report said.