Side Letter: Japan Post’s $91bn alts target; future of PE; iCap’s Asia moves

Happy Monday! Japan Post Bank has set even loftier ambitions for its enormous alternatives pot, having not met earlier targets. Plus: what the future of PE might look like and iCapital builds out in Asia. Here's today's brief, for our valued subscribers only.

They said it

“The free lunch is over.”

Anthony Tutrone, global head of alternative investments at Neuberger Berman, tells our colleagues at Buyouts (registration required) investors can’t count on multiple expansion as the market emerges from the covid-19 lockdown.

Just happened

Banking on alts
Japan Post Bank hopes to reach ¥10 trillion ($91.5 billion; €75.4 billion) of alternative assets under management by 2026, according to its latest Medium-Term Management Plan, published last week. The investor’s plans have been slow to realise: JPB has so far accrued just ¥4.2 trillion of the ¥8.5 trillion three-year alts target it set in 2018, of which ¥2.2 trillion is held in PE and ¥1.5 trillion in real estate.

Private Equity International caught up with former exec Taiichi Hoshino at the time of JPB’s last management plan to discuss how the institution would approach alts – you can read that interview here. Hoshino and at least three other executives who formed part of a leadership group known as the ‘Seven Samurai’ have departed the bank in recent years, according to Reuters.

PE’s future
What will the future of PE look like? That’s a question we attempt to answer in our Future of PE Special Report, out this month. First up are four areas that are likely to gain ground in the asset class. Here’s an excerpt for the time-pressed reader:

“What we see is that consumers are starting to shift behaviours because of ESG. They start to buy from company A not company B because of ESG. It’s also the case with business-to-business customers,” says Christophe de Vusser, a partner at Bain & Company. “Employees are also starting to look at ESG – if a company is not at the forefront of ESG anymore, young talent doesn’t want to work there. That means that ESG has become important as a driver of market share, so it’s become a value creation tool.” 

iCap’s expansion
On Friday, we broke the news that online alts platform iCapital Network had appointed Edwin Chan, former head of Asia at placement agent Probitas Partners, to lead its business in the region and launch a Hong Kong office. iCapital joins a growing band of private markets firms drawn to Asia’s burgeoning HNW scene, a dynamic we explored in March.

Women in PE
This Wednesday, PEI will be hosting a networking day exclusive to Women in Private Markets Summit attendees. There’s still time to register – learn more here.

They did the maths

Indian PE deals
India’s PE market remains active despite the country’s tragic battle with the coronavirus. PE and VC deployed $6.8 billion across 57 transactions last month, versus $930 million over 76 deals in April 2020, according to data from the Indian Private Equity & Venture Capital Association. Indian PE activity shot up towards the backend of last year as the pandemic made local businesses more receptive to outside investment.


Sub line indictment
Florida PE manager Elliot Smerling was indicted last week on charges of lying about his investor base to secure a $95 million subscription-backed credit line for a $500 million fund, according to a 12 May statement from the US Attorney’s Office for the Southern District of New York. The charges of wire fraud and bank fraud each carry a maximum prison sentence of 30 years.

These allegations shook the fund finance industry earlier this year. Lenders rely on information provided by managers to underwrite their subscription lines and, although LPs are ultimately on the hook, they generally have no direct contact with the bank. A closer relationship between the bank and the LPs may be necessary to stop things like this happening again.

Dig deeper

LP meetings. It’s Monday, so here are some LP meetings to watch out for this week.

18 May

19 May

20 May

21 May

Today’s letter was prepared by Alex Lynn with Adam LeRod JamesCarmela Mendoza and Michael Baruch.