GPIF gets go-ahead for direct fund commitments

The $1.5trn Japanese investor can now make direct investments into infrastructure, private equity and real estate funds.

Japan’s Ministry of Health, Labor and Welfare has formally given approval for the Government Pension Investment Fund, the largest pension in the world with $1.5 trillion in assets, to invest in alternative assets via a limited partnership structure.

The previous regulatory structure meant the pension could not make fund commitments to GPs and had to invest in alternatives through funds of funds and investment trusts.

Earlier this year, GPIF awarded infrastructure mandates to Pantheon, DBJ Asset Management and StepStone Infrastructure & Real Assets. The managers are mandated to help GPIF pursue fund investments and co-investments in core and brownfield strategies, primarily in developed markets.

The Japanese pension fund is now conducting due diligence and selecting fund of funds managers for private equity and real estate, after a request for proposals was issued in April last year.

The pension is recruiting private equity funds of funds targeting North America, Europe and Japan which focus on a number of strategies such as buyouts, growth capital, private debt and venture. It is working with Towers Watson Investment Services and Russell Investments Japan to carry out due diligence and evaluation.

As of end-September, GPIF had invested 0.1 percent of its total assets in alternatives, well under its long-term investment target of 5 percent.

GPIF spokeswoman Naori Honda told sister publication Private Equity International that the revised rule is a positive sign to help the investor diversify further into alternatives. “By introducing LP-style investments, we can participate in investments in a common way. It is also possible for us to invest in joint investment schemes with other institutional investors in the future.”

Honda highlighted that the pension will “look for investment opportunities through limited partnerships only after it is ready in terms of its organisational capacity such as human resources”.

– Hans Poulsen contributed to this report.