GPIF UPS INFRASTRUCTURE INVESTMENT BY NEARLY 50%

Japan’s Government Pension Investment Fund (GPIF) continued its push for investment into global infrastructure assets during the fiscal year ended March 2019 and diversified its investment destinations and sectors.

The mammoth pension fund said today (5 July) on its website that it has increased its global infrastructure exposure by nearly 50% to JPY 293.5bn (USD 2.7bn) as of 31 March 2019 over JPY 196.8bn for the period ending 31 March 2018.

“We aim to lock in stable income gains to our portfolio” [from such assets as airports], GPIF President Norihiro Takahashi told reporters at a press conference in Tokyo today. Investment into alternative assets, including infrastructure, can earn stable returns at a lower risk than by investing in stocks and bonds, he added.

The move further underscores how the pension fund is stepping up efforts to increase its infrastructure investment.

GPIF doubled its global infrastructure assets exposure after investments in UK’s Birmingham and Bristol airports, the company said in July last year.

This year, GPIF reported it has invested in a wind power operating company in Portugal through an infrastructure fund; telecommunication towers in France through another infrastructure fund; and a fund that owns a mega solar farm in Japan. The specific names of these targets have not been disclosed.

The pension fund committed JPY 144.8bn to the framework it launched in 2014 - Global Alternative Co-Investment Fund I - with Canada’s Ontario Municipal Employees Retirement System (OMERS) and the Development Bank of Japan. The fund has further committed JPY 98.0bn to StepStone G Infrastructure Opportunities LP; JPY 37.4bn to Pantheon G Infrastructure Opportunities LP; JPY 13.3bn to DG Infrastructure ILP; and JPY 100m to DG Infrastructure Opportunities LP.

GPIF can invest up to 5% of its assets in alternative investments including infrastructure under its mid-term business plan running through March 2020.

However, the USD 1.48trn-pension fund, nicknamed by market pros as “the whale” for its size, has been a relative latecomer in infrastructure investment. Its exposure to alternative assets accounted for only 0.26% of its overall portfolio as of 31 March 2019. The ratio compares to 0.13% for the same period a year ago.

The fund has called for diversified investments mainly in core, brownfield infrastructure funds in developed counties.

The US and Japan have emerged as new investment destinations, making up 11% and 3%, respectively, of the total global infrastructure assets, GPIF said. As a result, the UK’s share of GPIF’s infrastructure investments accounted for 45% of the total infrastructure portfolio as of 31 March 2019, down from 57% at the end of March 2018. Among the other countries, the investments declined to 10% for Australia (from 15% last year); Sweden 11% (from 15%); Spain 9% (from 10%). Exposure to Finland remained unchanged at 3%.

New investments by GPIF in sectors including energy (making up 9% of the total), renewable energy (6%) and telecommunications (3%), saw its proportion of investments decline in other sectors. GPIF’s investments in the share for port and harbor assets declined to 19% (from 27% last year), water and sewerage 16% (from 24%), airports 18% (from 21%), electric power transmission and distribution 13% (from 18%), and oil and gas pipelines 9% (from 10%).

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