January 30, 2018 / 10:35 AM / a month ago

UPDATE 1-Japan Post Bank to set up private equity fund management company

(Adds details, comments)

* Japan Post’s units to set up private equity fund management firm

* Japan Post Investment Corp to be established next month

* New company will invest in buyout deals in Japan

TOKYO, Jan 30 (Reuters) - Japan Post Bank Co said on Tuesday it would set up a private equity fund management company with up to 120 billion yen ($1.1 billion) in an initial fund.

The move comes as the bank, a unit of Japan Post Holdings Co , seeks higher-return assets in its $1.8 trillion investment portfolio.

The company, Japan Post Investment Corporation, will be 50 percent owned by Japan Post Bank and the rest by Japan Post Insurance Co, another unit of Japan Post Holdings, and employees of the new company, the bank said in a statement. It is scheduled to be set up in February.

Japan Post Bank senior management director Tokihiko Shimizu will become president of the new company, Japan Post Holdings’ chief executive Masatsugu Nagato told a news conference.

Japan Post Bank and Japan Post Insurance will provide a total of 90 billion yen to the new company as initial investment money, with an additional 30 billion yen expected to be raised from outside investors.

The new company will invest in domestic buyout deals and Nagato said it would initially invest in deals jointly with global private equity funds as it builds know-how in the field.

Nagato said Japan Post Bank has already made private equity investments as a limited partnership investor but the new company will make private equity investments as general partner, which can receive fund management fees.

He said the new company will have a staff of 30, adding it will also hire from outside of Japan Post companies.

Japan Post Bank, which manages about 200 trillion yen in investment assets faces diminishing returns amid persistently low interest rate. As a unit of government-owned Japan Post Holdings, it is under strict regulation, including an effective ban on loan operations.

Japan Post Insurance has an investment portfolio of about 80 trillion yen.

$1 = 108.6000 yen Reporting by Taiga Uranaka; Editing by Jacqueline Wong

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