December 13, 2013

GPIF Is Reportedly To Start Overseas Infrastructure Investments

According to The Nikkei Asian Review today:

 Japan's pension fund behemoth to invest in infrastructure abroad
TOKYO -- Japan's Government Pension Investment Fund (GPIF) will diversify its portfolio beyond bonds and stocks for the first time, targeting high-return overseas infrastructure.

     The public pension fund has some 120 trillion yen ($1.16 trillion) in assets under management. About 60% of that is in Japanese bonds, with the rest allotted to foreign bonds as well as domestic and international stocks.

     Under a partnership with the Ontario Municipal Employees Retirement System, a Canadian pension fund, it now plans to invest in airports, railways, ports and power facilities in the U.S. and Europe.

     Joint management will begin in 2014. Between tens of billions of yen and hundreds of billions of yen will likely be invested, although the exact amount has yet to be set.

     Last month, a panel of experts recommended to the government that the GPIF step up stock investment and begin putting money into infrastructure and real estate as well, in view of how the nation is moving to overcome deflation.

     Although infrastructure comes with the risk that the assets must be held for the long haul, it tends to offer higher returns than bonds and equities. Globally, pension funds are said to have far more than 20 trillion yen invested in infrastructure funds.

     The GPIF is in talks with other foreign funds to form similar partnerships, suggesting that it may raise the cap on infrastructure investment in the future.

     The fund has limited personnel that can handle new areas of investment, so the Ministry of Health, Labor and Welfare -- which oversees the GPIF -- decided Thursday to bump up the pay scale at the GPIF in an effort to bring aboard more investment experts.

The second paragraph from the bottom should better read (based on the original Japanese report)

    The GPIF is in talks with other foreign PENSION funds to form similar partnerships, suggesting that it may raise the cap on infrastructure investment in the future.

The source of information for this Nikkei article was not disclosed.

Reuters and Bloomberg also reported that Development Bank of Japan is a part of the reported GPIF/OMERS co-investment scheme.

Japan GPIF to buy inflation-linked JGBs, join Canada OMERS on infrastructure-sources

5:00pm EST TOKYO, Dec 12 (Reuters) - Japan's Government Pension Investment Fund, the world's largest public pension fund, will start buying inflation-linked government debt from April and will join Canada's OMERS in investing in infrastructure projects abroad, people familiar with the process said on Friday.

The $1.2 trillion fund will buy more than 400 billion yen in Japanese government bonds whose principal increases with rises in the nation's consumer prices, the sources told Reuters on condition of anonymity.

In tying up with OMERS, one of Canada's largest pension plans, GPIF joins a big investor with experience in infrastructure and will also be joined by the government-owned Development Bank of Japan, the sources said.

A spokeswoman for OMERS in Toronto was not immediately reachable for comment.

GPIF carries great weight in financial markets because of its enormous size and its role as a leader of other Japanese public funds, which have total assets of more than $2 trillion. 

The fund is under pressure to overhaul its portfolio, which is heavily weighted towards very low-yielding straight JGBs, as part of Prime Minister Shinzo Abe's drive to boost returns to help support Japan's burgeoning elderly population. Abe also wants to channel the nation's vast pools of financial assets towards riskier investments and more productive uses.

Earlier this month, GPIF president Takahiro Mitani told Reuters he had a strong interest in buying inflation-linked JGBs as an inflation hedge for the fund's portfolio but noted that the current amount is very low. The government plans to double its issuance of inflation-linked JGBs to 1.2 trillion yen next fiscal year as Abe pushes to break Japan free from 15 years of deflation, government sources said at the time.

GPIF is also considering further investment in alternative assets, such as private equity, as recently recommended by a government panel, one source said on Friday.

A government advisory panel has been looking for ways to have GPIF help revitalise Japan's capital markets, finding more productive uses for the country's $15 trillion in household assets, which are largely locked in very low-yielding bank accounts and Japanese government bonds. (Reporting by Chikafumi Hodo and Takaya Yamaguchi; Additional reporting by Euan Rocha; Writing by William Mallard; Editing by Chizu Nomiyama)

Bain To Invest JPY 17 Billion In Macromill Take-Private

Bain Capital has initiated a TOB to acquire 100%of outstanding shares and stock options issued by Macromill, Inc., which conducts internet-based marketing research in 87 countries with  the top market position in Japan and Korea.

The maximum amount of share purchase will be JPY 53 billion including fees.  The purchase price was set at 29.3% over the last 6 month average share price. Yahoo Japan is the largest shareholder with a 22.4 % stake.

Bain will invest JPY 17 billion through an SPC and up to JPY 36 billion will be financed by Mizuho Bank (JPY 28 billion) , Mizuho Capital Partners' mezzanine fund #2  (JPY 2 billion), Mizuho Securities Principal Investments (JPY 2 billion) and Chuo-Mitsui Private Equity Partners #8 (JPY 4 billion).

Macromill has a revenue of JPY 17 billion with JPY 4.2 billion EBITDA for the FY ending June 2013. The company had a net cash of approx. JPY 8 billion. Macromill aims to invest more aggressively in its research systems as well as business development globally by going private.

December 10, 2013

INCJ To Promote Japanese Venture Industry Via Robust Database And Large LP Commitments

The Innovation Network Corporation of Japan (INCJ) has announced that it will support Japan Venture Research Co. to create a robust venture company database. INCJ aims to foster a venture eco-system by promoting the use of such date base by venture capitalists, strategic and financial investors, entrepreneurs, industry professionals and academics. According to Nikkei, INCJ considers an extensive database on venture companies is essential for the growth of Japanese venture industry and for the  promotion of venture investments from home and from overseas. The venture database will have 10,000 companies and their basic information will be made available for free.

In October this year, INCJ made its first investments in venture funds as an LP by committing JPY 10 billion to UTEC (The University of Tokyo Edge Capital) 's 3rd fund.  In November, it made JPY 6 billion commitment to medical device incubation fund MedVenture Partners #1 with Mizuho Bank, followed by another JPY 10 billion commitment to ICT-focused Global Brain 5th fund.

December 05, 2013

Tokio Marine To Set Up A Mezzanine Fund

On Dec 3rd, Tokio Marine & Nichido Fire Insurance announced that it will establish a new subsidiary,  Tokio Marine Mezzanine Corp. which will manage a JPY 30 billion (target) mezzanine fund.
Tokio Marine will commit  JPY 10 billion from its balance sheet.

Tokio Marine has arranged 20 mezzanine financing deals since the 1990s, one of which involved Japanese sushi restaurant operator Akindo Sushiro.

December 04, 2013

Tokio Marine CP Sells Barneys Japan To Seven & i

Tokio Marine Capital Partners has agreed to sell its 49.99% holdings in Barneys Japan to Seven & i Holdings, which holds major department store operator Sogo & Seibu,   in addition to 7-Eleven and supermarket chain Ito Yokado.

The sale of the Japanese business of Barney‘s New York is reportedly for JPY 6 billion. It logged sales of JPY 19.5 billion last fiscal year and expects a higher number this year aided by increased spending on high-end goods.

In 2006, Tokio Marine and Sumitomo Corp. jointly acquired Barneys Japan from Isetan, another major  department store operator. Isetan had acquired a stake in Barneys New York in 1989 and later suffered a USD 400 million write-off when Barneys NY went bankrupt.  

Sumitomo Corp. will continue to hold a 50.01% stake in Barneys Japan. 

This makes the 3rd exit from Tokio's 2005 vintage fund. Last week, Bushu Pharmaceuticals, the last portfolio company of Tokio's 2005 fund, acquired a pharmaceutical plant nearby Tokyo from Eisai Co. The acquisition will triple Bushu's production capacity. 

December 02, 2013

Advantage To Sell 9.5% of Nissen To Seven & i

Seven & i Holdings Co.,  the parent of Seven Eleven and Ito Yokado supermarket chain has announced that, through its subsidiary Seven & i Net Media,  it will acquire up to 50.74% of Nissen Holdings, a catalogue and online retailer, through a TOB. Seven & i aims to bolster its catalogue/online merchandising operation by having Nissen as its subsidiary.

The TOB price is set at JPY 410,  which represents a 27.7% premium over the past 6 month average share price. 

According to Seven & i filing documents, Advantage has agreed to sell its remaining 9.5% holdings, which will bring JPY 2.36 billion to the fund. Advantage had purchased 14.4% of Nissen in 2007 at JPY 780 a share through a private placement.

The largest shareholder, UCC  (Ueshima Coffee)  Holdings will also sell its 20.9% holdings in Nissen.