Japan's Chikyoren awards overseas PE mandate

Government and corporate pension funds – except for the Government Pension Investment Fund (GPIF) – are required by law to operate through local gatekeepers rather than invest in private equity funds and limited partnership-type structures directly. This is the fourth PE mandate Chikyoren has issued in the last couple of years. The others – all for domestic coverage – went to Sumitomo Mitsui Trust Bank, Mitsubishi UFJ Trust, and Alternative Investment Capital (AIC).

Since early 2016, the pension fund has issued 15 mandates for alternatives across real estate (three domestic, two overseas), infrastructure (one domestic and five overseas), and private equity (three domestic and one overseas). UBS Asset Management was selected as the latest overseas infrastructure recipient at the same time as Sumitomo Mitsui was chosen for overseas PE.

Chikyoren is responsible for the Employees’ Pension Insurance Benefit Adjustment Fund, which had JPY11.2 trillion ($100.5 billion) in assets as of March 2017. Just over half of this was held in domestic and foreign bonds. The alternatives allocation was 0.4%, although the upper limit is 5%. It also manages the Transitional Long-Term Benefit Adjustment Fund and the Annuity Retirement Benefit Adjustment Fund, which were worth JPY11.7 trillion and JPY33.6 billion.

Chikyoren is unusual among large Japanese pension funds for its longstanding private equity exposure, having made its first commitment in 2002. It is one of eight funds – with combined total assets of nearly $670 billion as of year-end 2017 – that sits below the JPY151 trillion Government Pension Investment Fund (GPIF), according to Willis Towers Watson. GPIF made a couple of initial forays into alternatives before starting to issue mandates last year.

Chikyoren operates a manager entry system that accepts registrations on a continuous basis. In July, domestic and overseas private debt joined real estate, infrastructure, and private equity in the system.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• North Asia
• LPs
• Fundraising
• Pension Fund Association for Local Government Officials (Chikyoren)
• Pension Fund Association