Japan Post units establish PE arm

The investment company will have about $1bn to back buyout deals and venture investments in the world's third-biggest economy.

Japan Post Bank and Japan Post Insurance, among the country’s largest investors in terms of their assets under management, are establishing a private equity unit to finance buyout deals in Japan, venture investments as well as those focused on business succession and rehabilitation, according to a joint statement.

Japan Post Investment Corporation is set to start operations on 9 February and will be responsible for all private equity investment activities carried out in the domestic market such as forming funds, providing management support to portfolio companies, and supplying equity financing together with their fund managers, the investors said in the statement.

Japan Post Bank and Japan Post Insurance, also known as Kampo, will reportedly provide a total of ¥90 billion ($830 million; €670 million) to the new company as initial investment, with an additional ¥30 billion expected to be raised from outside investors.

Japan Post Bank and Japan Post Insurance will hold 50 percent and 25 percent voting rights in the JV respectively, while officers and employees of the new company will hold the remaining 25 percent.

Japan Post Bank’s senior management director Tokihiko Shimizu will become president of the new company, according to local media reports.

Japan Post Bank, with $1.9 trillion in assets, is eyeing more co-investments and club deals in the Japanese market, as previously reported by Private Equity International. The bank has a target allocation of 3 percent, or as much as $60 billion, for alternative investments from its overall AUM. This allocation will include investments in private equity, hedge funds, infrastructure and real estate. Meanwhile Japan Post Insurance was managing about $700 billion as of end-September 2017. The investor has not disclosed its target allocation to alternatives.