Posting gains
Japan Post Bank, one of the country’s most bullish alternatives investors, has had a massive jump in its private equity portfolio over the past 12 months. The ¥226 trillion ($1.65 trillion; €1.5 trillion) bank’s PE holdings rose by ¥2.4 trillion – or 75 percent – in the year to 31 March, per its latest annual report. PE funds accounted for an estimated ¥5.6 trillion of the portfolio, including ¥1 trillion of unrealised gains. It is worth noting that the PE holdings are calculated on book value as of 31 March 2022.

Still, JPB’s growth helps to illustrate a wider ongoing issue in Japan over the past year. The yen’s depreciation relative to the US dollar and PE’s resilience relative to public markets has caused a simultaneous numerator-denominator effect for many Japanese institutions, as Private Equity International explored in its latest Japan Special Report. The dynamic has prompted some to cut ticket sizes or decline re-up opportunities altogether – a temporary setback for the many international GPs that have launched Japan offices in recent years to access the nation’s vast reserves of LP capital.

Last year’s spike brings JPB’s strategic investment portfolio – comprising PE, real estate funds and others – to ¥10.1 trillion. This puts the institution ahead of its 2021 Medium-Term Management Plan, in which it expressed a desire to have ¥10 trillion allocated to alternative investments by March 2026. It’s unclear if and how this overperformance will impact JPB’s commitment activity moving forward, and whether it too will have to rein in its future activity to avoid shooting any further past its target allocation.

Falling short
Sixteen brand-name buyout funds targeting $15 billion or more respectively will close below their aggregate targets. That was a prediction made by John Stake, managing director and co-head of Hamilton Lane’s fund investment team, at a Tuesday media roundtable in London that Side Letter attended. Three of the 16 funds seen by Hamilton Lane have exceeded their targets, and two have closed. Only four of the 16 have reached the size of their predecessor.

“What we have found them able to achieve is typically get to their prior fund target and then really stall out and struggle to go further from there,” he said. “What we are expecting… [is] in aggregate, when they finally wrap up things, they’re going to fall short.”

For those 16 names Hamilton Lane is tracking, Stake said the funds are going to be in market “for longer than ever before” and most of them will likely need an extension. What’s more, Hamilton Lane estimates that buyout managers on the whole will likely raise less than 100 percent of their stated targets in 2022, Stake says, noting that the firm anticipates it will be August or September before it has data finalised as it takes time to get final closing amounts from general partners. The last time funds closed under 100 percent of their fundraising was in 2011, according to Hamilton Lane.

“We were estimating four of those, when we put this together in January, [would need an extension]. I’ve actually already seen four of them extend and I think there will be more,” Stake said. “Ultimately, very few of them will hit the hard-cap, whereas previously that was quite the norm and sort of the time between those first and final closes is just going to extend quite a bit.”

Essentials