PE firm, mandated by GPIF, seeks help

Nov 28, 2012

Brightrust, a Japanese private equity specialist, says it wants outside ideas on helping Japan’s pension giant to handle alternatives.

Earlier this week, Japan’s ¥113.6 trillion ($1.4 trillion) Government Pension Investment Fund, the world’s largest pension fund, mandated third-party alternative investment firms to come up with ideas about helping the GPIF access the asset class.

Now one of those appointees is turning to the wider world for ideas of its own.

Brightrust PE Japan, a private equity firm with a buyout specialisation, is inviting submissions about “how best [a] large and conservative Japanese pension fund can develop a new investment programme targeting private equity, infrastructure and real estate”, according to website www.ijapicap.com.

The GPIF has for several years debated the necessity of diversifying into alternative investments. Like most Japanese institutions, it invests primarily into just four asset classes: domestic and international bonds, and domestic and international equities.

The vast majority of these allocations are passive. The GPIF runs on a skeletal staff because of the simplicity of its investment strategy, and its people do not have experience with private equity, hedge funds or absolute-return type strategies.

However, this week GPIF formally mandated several firms to help it come up with a suitable game plan for accessing private equity, real estate and/or infrastructure (not hedge funds). These include local law firm Atsumi & Sakai, T&D Asset Management (owned by a local insurer), Swiss PE firm Capital Dynamics and Brightrust.

The research and conclusions are meant to be handed in by the end of March, coinciding with the end of the Japanese fiscal year, and made public.

Brightrust is now “welcoming the well-informed thoughts of other professionals”, as www.ijapicap.com puts it.

This begs the question of why the GPIF itself didn’t think to ask for these – or why more PE specialists aren’t already working with the GPIF on this issue. Brightrust hasn’t indicated if it is paying for outside advice or how this will be packaged when ultimately presented to the GPIF.