Top executives from Industry Funds Management (IFM), the fund manager owned by 30 non-profit Australian superannuation funds, have been visiting investors and regulators in Japan for the past week in preparation for opening an office in Tokyo in the first quarter of 2014, according to the firm.
The $47 billion fund manager, which currently has almost $14 billion invested in infrastructure globally, has been doing extensive due diligence in Japan over the past few years, and is now working on visa and licensing issues to set up an office by January of next year, according to Brett Himbury, the firm’s chief executive.
IFM chose Tokyo as its Asia destination of choice primarily because of the institutional investor base already there, Himbury explained. While Hong Kong and Singapore are considered the financial centres of the region, IFM found the institutional base of those cities to be more retail-based. The rule of law is also more mature in Japan, so that is where the fund manager wants to start its efforts, primarily focusing on infrastructure and infrastructure debt.
“We realise that we will need to be there and be patient,” Himbury said. “In order to be successful, you need to commit to these countries.” IFM will start out being “cautious and deliberate” with its Japan office. So far, IFM has a small exposure to Asia through its private equity investments, but none so far in infrastructure.
Himbury emphasised that IFM will not be investing directly in Japan just yet. “We simply don’t understand that market and culture well enough,” he said. Instead, IFM will be focusing on attracting institutional investor capital from Japan to invest in global infrastructure. Eventually, the firm hopes to nurture an investor base in Asia to complement its existing one in Australia.
IFM is flexible about how that money can be raised, Himbury added. Japanese investors will be able to commit to IFM’s current funds, or they can request separate accounts or asset-specific funds.
“[Japanese investors] are sophisticated, and it would be no surprise to us if they want high levels of transparency, involvement, and even control,” Himbury said. IFM’s investor base is fairly small, which gives it the latitude of working closely with investors, Himbury added. IFM hopes to continue such interaction in its Japan office.
In the past year, IFM has been making an aggressive push overseas, having won commitments from US institutional investors such as the New Mexico State Investment Council and opened a Berlin office. Most recently, IFM hired Rich Randall, a North America infrastructure debt professional, to build a debt team in New York.