Any general partner claiming not to be curious about the movements of the Government Pension Investment Fund of Japan (GPIF) might find themselves accused of being economical with the truth. After all, this is a gargantuan of the pension world which has been slowly graduating toward alternative assets.
In January, in one of the $1.3 trillion pension fund's most significant steps toward investing in private markets, Hiromichi Mizuno joined the firm as its first-ever chief investment officer, just months after GPIF confirmed he would come on board as a senior advisor. A head-turning development indeed.
“It is fortunate that [Mizuno] has a very good private equity background. Because of it, he will have his own views on how GPIF should be making investments [in the asset class],” one industry commentator believes.
Another source, a Japan-based GP, agrees that, while it is known that Mizuno will be targeting other private markets too, it is encouraging that he has a strong private equity pedigree, having worked at London-based secondaries firm Coller Capital since 2003.
He quips: “We hope he won't forget about us!”
But now – as Mizuno prepares to build up GPIF's private markets investment capability, having been permitted to invest as much as 5 percent of total assets (equating to a mammoth $65 billion) in alternatives – he needs a large, professional team to support him.
Essentially, GPIF is hiring.
The firm has already recruited a number of investment professionals for its private markets team, although they remain unnamed. It is also continuing to look, according to market sources.
GPIF has reportedly enlisted Japanese executive search firm Kotora to organise a private seminar in February, at which the pension giant will inform potential job applicants about its reforms and what qualities it is looking for in new joiners.
Indeed, it will likely require a highly experienced investment team to take $65 billion and invest it on behalf of the conservative pension fund as it commits to alternative assets for the first time.
But attracting the best investment professionals comes at a price, which is not in keeping with Japanese tradition of paying their public executives relatively low salaries – humble figures compared with those raked in by some fund managers globally.
However, this hasn't deterred GPIF, which has given Takahiro Mitani, its president, a 64 percent pay rise, taking his annual salary to JPY31 million ($260,000; €228,000), a respectable but not egregiously large amount.
Bloomberg reports that Mitani, who intends to step down from his position in March, would still earn 40 percent less per year than the chief executive officer at the California Public Employees' Retirement System.
According to local private equity players, this could be the first time a public Japanese organisation has offered such remuneration benefits, having been offered exemptions from regulators, and indicates GPIF is serious about hiring the best talent.
“To attract professional talent, a cabinet panel has recommended that GPIF be exempted from guidelines [constricting public employees' pay rates],” one Tokyo-based source explains.
Nevertheless, a GP source adds that Mizuno still has his work cut out, explaining that a private equity executive from a sophisticated investment institution like Coller is likely to face some challenges in jump-starting the “very conservative” organisation to diversify and invest in riskier assets.
He says: “GPIF is a very important player, but hasn't made any [investments] yet. It is not an easy [job for Mizuno]. GPIF is very big, with everyone watching it, including politicians.”