The world’s biggest pension fund named a private equity executive to its investment committee amid mounting pressure on the Japanese retirement manager to diversify assets and increase financial-market expertise.
The 126.6 trillion yen ($1.2 trillion) Government Pension Investment Fund hired Hiromichi Mizuno, a partner at London-based Coller Capital Ltd., according to a statement from Japan’s health ministry, which oversees the fund. Mizuno starts a two-year term on the eight-member panel from today, replacing Kimikazu Noumi, president and chief executive officer of Innovation Network Corp. of Japan.
The appointment comes as GPIF starts investing in infrastructure and moves closer to completing a portfolio review that is expected to see it cut holdings of domestic debt. A government panel handpicked by Prime Minister Shinzo Abe called on the fund in November to invest in assets including private equity, venture capital and real estate to boost returns and reduce interest-rate risk as the country exits deflation.
GPIF and other public pensions should diversify by “investing in new types of assets,” according to the report from the government panel led by Takatoshi Ito. To broaden the portfolio mix and improve risk management, “it is essential for each fund to introduce leading experts.”
Mizuno will also act as an adviser to GPIF, separate from his investment-committee role, according to the health ministry statement.
He joined Coller Capital in 2003 and is responsible for finding, arranging and monitoring investments, according to the company’s website. Mizuno previously worked at the then Sumitomo Trust Bank, with roles including head of private equity investment in New York and vice president of the international credit department in Tokyo, according to the website.
Coller Capital, founded by British financier Jeremy Coller, specializes in buying assets from other private-equity investors who are seeking to free up capital. It spends from $1 million to more than $1 billion on each transaction and has done deals with Lloyds Banking Group Plc, Credit Agricole SA and Royal Dutch Shell Plc, according to its website.
GPIF overhauled its investment committee in April, adding three members from the panel selected by Abe last year to advise on the fund’s reform. One of those, Yasuhiro Yonezawa, was later appointed chairman of the committee, while Sadayuki Horie, another, was named deputy.
Only two of the previous members remained after the revamp, one of which was INCJ’s Noumi, whose six-year stint has ended. The other is Hiromichi Oono, a board member at Ajinomoto Co.
Ito’s panel recommended in November that legislation be enacted to give GPIF independence from the health ministry. As a transitional measure until the law is passed, multiple members of the investment panel should be hired full-time, according to the panel. The fund is allowed as many as 11 people on the committee, meaning it has room to hire three more.
Mizuno sits on nine advisory committees, including Tokyo-based private equity firm Advantage Partners LLP and the venture capital unit of India’s ICICI Bank Ltd., according to the Coller Capital website. He has also served as an adviser to Nobel Prize-winning stem-cell researcher and professor at Kyoto University, Shinya Yamanaka, according to today’s statement.
“Japanese investors are often criticized for not taking risk,” Mizuno wrote in a Twitter post on June 27. “I see risk as an unforeseen mistake. But a mistake that is within expectations must be viewed as a cost of achieving success. It’s right that investors don’t take risks, but most of them aren’t able to profit because they don’t assume the costs.”
Mizuno also posted a comment on Twitter in May saying he’s concerned that the inclusion of GPIF in the government’s growth plans gives the impression the fund’s reform is to boost stock prices, rather than for the benefit of pension finances.
“I think it’s a disaster to debate it as part of the growth strategy,” Mizuno said. “Of course the public pension fund should welcome Abenomics. But this is because it will be a beneficiary of it, not because it will be its driving force.”
Abe’s revised growth policies, finalized in June, urged GPIF to immediately alter its asset mix in response to changes in the economy and change the fund’s governance structure.