Japan Post targets higher-yield assets

Masatsugu Nagato said Japan Post Holdings would add to last year's $5 billion acquisition of Australia-based Toll Holdings with further deals in the logistics space, The Wall Street Journal reported. He also indicated there would be investments in private equity funds, infrastructure and offshore real estate investment trusts (REITs).

Nagato was appointed last month, replacing Taizo Nishimuro. He was previously president of Japan Post Bank, which last year created a division to explore PE opportunities and was expected to start making commitments in the first half of 2016. Before departing Japan Post Bank, Nagato said that infrastructure, private equity and offshore REITs would be considered as part of a more aggressive investment strategy.

Japan Post Holdings listed last November alongside Japan Post Bank and Japan Post Insurance. As of March 2015, Japan Post Group had JPY295.8 trillion ($2.7 trillion) in assets - JPY9.1 trillion with Japan Post Holdings, JPY5.4 trillion with Japan Post, JPY84.9 trillion with Japan Post Insurance, and JPY206.2 trillion with Japan Post Bank.

Japan Post Bank, which had around 45.2% of its assets in Japanese government bonds last September, has already announced plans to increase investments in higher-return assets by 30% to JPY60 trillion over a two-year period. Nagato said this target was achieved by the end of last year. Japan Post Insurance has half of its assets in government bonds and earlier this year indicated that it would increase exposure to foreign debt to boost returns.

Following the Bank of Japan's decision in January to introduce negative interest rates, the yields on certain bonds have also entered negative territory. It has prompted numerous insurance companies to target assets overseas, despite a preference for long duration yen-denominated products because most payouts are made in local currency.

Last week, Nippon Life Insurance said it had set aside JPY40 billion for a global investment platform that will make commitments to infrastructure equity funds. Its target segments are utilities, transportation and social infrastructure such as schools and hospitals.

Dai-ichi Life Insurance plans to increase investments in aircraft leasing and infrastructure, as well as private equity and hedge funds, with JPY100 billion earmarked for aircraft financing, according to a separate WSJ report. Meanwhile, Sumitomo Life Insurance wants to deploy an additional JPY100 billion in foreign currency debt and infrastructure by March of next year, and Daido Life Insurance plans to strengthen its existing private equity portfolio.

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• Topics
• North Asia
• LPs
• Fundraising
• Infrastructure
• Real estate
• Japan
• Japan Post Bank