March 1, 2018 / 10:41 AM / 3 months ago

Japan Post's $1.1 bln buyout fund aims to invest with KKR, Permira, others -exec

* New Japan Post fund plans to team up with global, domestic funds

* Firm aims to make at least 10 investments from first fund

By Junko Fujita and Takahiko Wada

TOKYO, March 1 (Reuters) - Japan Post Holding Co’s new $1.1 billion private equity fund plans to team up with global buyout firms such as KKR, Blackstone and Permira to invest in companies in Japan and overseas, a senior group executive said.

The Japan Post group announced in January it is setting up a private equity fund investment company, Japan Post Investment Corporation, with up to 120 billion yen ($1.12 billion) in an initial fund.

The move signals Japan Post Holding’s firmer commitment to alternative investments as its banking unit Japan Post Bank - which will provide seed money for the fund - faces diminishing returns amid persistently low interest rates.

Tokihiko Shimizu, chief executive officer of Japan Post Investment Corp, said buyout investors are looking for co-investors as they try to stretch their investment size beyond their funds’ capacities.

“For example, Bain Capital is buying the chip unit of Toshiba, but the investment was made with other investors,” said Shimizu. “Bain’s investment amount was only limited.”

The Bain Capital-led consortium agreed to buy Toshiba Corp’s chip unit for $18 billion as Toshiba aimed to shore up capital.

Japan Post Investment has hired several industry experts into senior positions at the firm, including Kei Mizukami, who was formerly head of CVC Capital Partners’ Japanese operations, said Shimizu.

It will make at least 10 investments from the first fund and the investments will only be made with other private equity firms, including domestic ones, Shimizu said.

The value for each investment could vary from 2 billion yen to 15 billion yen, he said, adding that Japan Post Investment aims to take about 15 percent of voting rights in each target company.

Shimizu said Japan Post Bank and Japan Post Insurance Co , another unit of Japan Post Holdings, will provide a total of 90 billion yen as initial investment money, with an additional 30 billion yen expected to be raised from outside investors.

Shimizu is a former executive at Government Pension Investment Fund (GPIF), the world’s largest pension fund, and led GPIF’s major policy shift in 2014 where it increased investments in riskier assets such as stocks. ($1 = 106.7300 yen) (Reporting by Junko Fujita Editing by Malcolm Foster and Muralikumar Anantharaman)

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