Japan PM seeks to direct public pension funds to startups
Japanese Prime Minister Fumio Kishida said he’d create a path for funds from the Government Pension Investment Fund - the world’s largest of its sort - to flow to startups and venture capital.
In a Tuesday evening meeting on his administration’s New Capitalism policies, he added he would seek to attract individual and foreign investments to startups. Kishida plans to review the country’s IPO process to ensure that startups have access to sufficient funds, he said, and create campuses for such new businesses.
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He didn’t provide details on a funding path involving Japan’s GPIF, whose investment performance can become a political issue in one of the world’s most aged societies.
Kishida took office in October promising to pursue a new form of capitalism to reduce disparities in society. Among other economic priorities, he’s also vowed to bolster Japan’s startups, which attract just a small fraction of the funding raised globally.
The premier said he would strengthen non-financial disclosure by companies, adding he aimed to have guidelines on this drawn up by the summer.
His panel on New Capitalism is set to finalize its policies in June, just ahead of an upper house election set for July, which could determine whether Kishida’s dispatched through the “revolving door that’s seen many past prime ministers replaced after a year or so.”
GPIF said by email it wasn’t aware of the details of Kishida’s remarks. The organization can invest in venture capital funds under current regulations, but doesn’t disclose whether or not it has invested in such assets.
Japan’s GPIF has around 200 trillion yen ($1.6 trillion) in assets, which are currently divided evenly between domestic and foreign equities and bonds.
While its policy is to allow up to five percent of its assets to be held in alternative investments such as private equity, such investments accounted for only 0.92 percent of its holdings as of the end of December 2021.
Shingo Ide, chief equity strategist at NLI Research Institute, said he didn’t expect investments in startups or venture capital funds to improve GPIF’s investment returns much.
“It may be worth using the funds for the future of Japan,” he said. “It’s unclear whether that’s what the public wants. I think there are arguments on both sides.”
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