Japan’s $196-billion Pension Fund Association for Local Government Officials, or Chikyoren, has appointed BlueBay Asset Management and Tokyo-based Alternative Investment Capital to manage its alternatives mandate.
It said in a statement last week that it has awarded an offshore private debt mandate to BlueBay and a domestic private equity mandate to Alternative Investment Capital. Chikyoren did not disclose the capital allocation for the mandates.
Headquartered in the UK, BlueBay is an active fixed income manager with over $62 billion assets under management in corporate and sovereign debt, rates and foreign exchange. It is a wholly-owned subsidiary of Royal Bank of Canada with full investment autonomy and substantial operational independence.
On the other hand, established in 2002, Alternative Investment Capital claims to be one of the leading private equity firms in Japan focusing on PE and energy and infrastructure. The firm counts Sumitomo Mitsui and Daido Life Insurance as its biggest shareholders, with holdings of 40.1 per cent and 36 per cent, respectively.
Last month, Chikyoren picked Sumitomo Mitsui to manage its overseas private equity mandate and UBS to manage the fund’s overseas infrastructure mandate.
The state pension fund intends to increase the weighting of its alternative investments – including private equity, infrastructure, and real estate – to as much as 5 per cent of total AUM in the long term from a mere 0.1 per cent in 2016, per its annual report.
Pension funds the world over are allocating more towards alternative assets as the diversification has helped investors cushion the volatility of equity markets. Japan’s Government Pension Investment Fund (GPIF) has recruited asset managers for investments in private equity, infrastructure, and real estate.
In March, the $1.4 trillion GPIF said it is on the lookout for one or more external consultants to work on strategies investing in alternative assets. As the world’s largest pension fund, it aims to allocate 5 per cent of its total assets to alternative investments.