Wednesday, 27th April , 2016
On April 18, GPIF (Government Pension Investment Fund, AUM : 1.25 trillion USD) announced RFP, which is a form of “Call For Applications” from asset managers for non-Japanese equities.
This “Call For Applications” is an initial process of asset manager & product selection, which GPIF defined as a “Manager Entry System”. GPIF will be announcing its other asset classes for “Call For Applications” in the coming future.
Prior to GPIF, the last year, the 2nd largest Japanese public pension fund Chikyoren (Pension Fund Association for Local Government Officials, AUM : 185 billion USD) has issued RFP ( “Call For Applications”) for oversea & domestic real estate, and oversea & domestic infrastructure.
Also KKR (Federation of National Public Service Personnel Mutual Aid Service, AUM : 68 billion USD) has issued RFP ( “Call For Applications”) for domestic real estate, and oversea & domestic infrastructure.
By comparing requirements for these RFPs by public pensions, major terms are common. Asterisk Realty and Placement Agency assumes that followings are key requirements for GPIF`s REP for alternative assets including global real estate and infrastructure.
Entry Criteria and Qualifications
(A) The asset manager must be a certified institution which can invest and manage financial products based on the financial instrument and investment law (FIEL), or is certified by the ordinance for enforcement of the act on engagement in the trust business by a financial institution. For financial products where the investment decision is made by third party asset managers, the outsourced parties must be authorized by the government or other legislative bodies in its residing country.
(B) The institution has no management issues (excessive debt, negative earnings for three consecutive years)
(C) The AUM of domestic and overseas investment should exceed over 100 billion JPY
(D) Has no compliance or regulatory related issues
(E) The outsourced third party asset manager should have no issues with (B) and (D)
A key point of these requirements is (A), which means that foreign fund manager needs to be outsourced by a Japanese local fund manager or a trust bank.
Furthermore, Chikyoren specified requirements for investment products for real estate and infrastructure
– Real Estate : Investment management products investing in Real Estate in domestic and overseas (securities, trust beneficiary right and other asset backed by real estate. Excluding listed funds and product backed by listed securities)
– Infrastructure : Investment management product investing in Infrastructure in domestic and oversea (securities, trust beneficiary right and other assets backed by real estate. Excluding listed funds and products backed by listed securities)
※ Invest management products must be provided by a discretionally management contract
※ More than 3 years track record of invest management of the same assets is required
By analysing discussions by The Ministry of Health, Labour and Welfare (MHLW), a supervisor of Japanese public pension, what MHLW paying attention for selection of asset manager and product for public pensions is whether or not they can get public consensus. They require crystal clear process in Japanese.
Japan’s public pensions require both application processes for their RFPs and reports for their asset management in Japanese . A right local Japanese partner is Rosetta Stone for foreign fund managers.
But, in most cases, major eligible Japanese local fund manager including trust banks are negative to partner with a specific oversea fund manager in order to avoid conflict with others. And generally, neither of other eligible Japanese asset managers and foreign fund managers don’t have enough experience and platform to work together for cross-border service to Japanese public pensions.
This gap needs to be filled immediately to accommodate ongoing reform of Japanese public pensions portfolio. Seeing the gap, Asterisk Realty & Placement Agency is now focusing on supporting this process for both of local Japanese asset managers and overseas fund managers.
Japanese public pension group with over 1.5 trillion USD AUM, their big steps to global real estate and infrastructure has just begun.
By Yukihiko Ito, Managing Director of Asterisk Realty & Placement Agency
About Asterisk Realty & Placement Agency
Asterisk is a private fund placement agency for global alternative in Japan. Through our unique and extensive network of Japanese investors, we support global fund managers in accessing Japanese and Asian institutional investors (pensions, financial institutions, real estate developers, other business companies, etc.).
We provide access and strategies for overseas fund managers to bridge the gap between them and Japanese investors.
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