Tokio Marine trims private equity allocation

The investment advisory wing of Japan’s Tokio Marine & Nichido Fire Insurance cites declining opportunities in the asset class as the main reason for reducing its allocation.

Tokyo-based Tokio Marine Asset Management has cut back on its allocation to the private equity asset class.

“Tokio Marine will continue to allocate to private equity, but at a lesser amount than in previous years,” said Toshiyuki Kumura, head of the firm’s private equity group, who declined to specify the new allocation amount.  

Investment activity has this year has slowed down. Funds … have postponed their fundraising activities to next year.

Toshiyuki Kumur

Formerly, the firm invested between JPY15 billion ($152 million; €117 million) and JPY20 billion in the asset class per year.

“The primary reason for cutting back our allocation to private equity is declining opportunities, not the denominator effect,” said Kumura in an interview. 

“Investment activity this year has slowed down. Funds that were being raised this year have postponed their fundraising activities to next year. So our budget allocated to it is smaller than last year’s in response to less fund investment opportunities,” he added.

The firm allocates 60 percent of its portfolio to buyout funds, 25 percent to venture and the balance to other funds, such as distressed investment funds.

US-focused funds account for 45 percent of its portfolio while Europe and Japan account for 25 percent each. The remaining 5 percent is allocated to Asia-focused funds.

Tokio Marine is currently developing a Japanese private equity fund of funds, which will allocate between 60 percent and 80 percent to Japanese private equity funds.

In December 2008, the firm launched its London fund operations to market products such as Japanese equities, private equity and fund of hedge funds, to European clients with an appetite for Asian exposure.

Tokio Marine manages JPY4793 billion in total assets and has invested in about 130 private equity funds globally. California-based Pathway Capital Management is the firm’s investment consultant.