Japan’s GPIF to invest $2.7 billion in infrastructure alongside OMERS, DBJ

Japan's Government Pension Investment Fund will invest up to $2.7 billion in infrastructure assets over the next five years in a co-investment deal with Ontario Municipal Employees Retirement System and Development Bank of Japan, confirmed Tokihiko Shimizu, the director-general of the $1.3 trillion pension fund's research department.

OMERS, the C$65.1 billion (US$58.8 billion) Toronto-based pension fund, will contribute up to $5 billion, while DBJ will invest up to $100 million.

According to a GPIF news release Friday, the co-investment will be structured as a unit trust, to be managed by Nissay Asset Management.

OMERS will propose infrastructure investment opportunities, with Nissay Asset Management making investment decisions on which opportunities to pursue. Mercer Investments will advise Nissay, according to the news release.

The GPIF's $2.7 billion commitment amounts to roughly 0.2% of fund assets. In a telephone interview Friday, Mr. Shimizu said further decisions on a new strategic asset allocation, including allocating GPIF assets to alternative investments, will be made over the coming year, after the government revises its mandate for the fund's expected return and risk profile.

GPIF, OMERS and DJB will invest in assets such as “power generation, electricity transmission, as pipeline and railways in developed countries,” according to the news release. Mr. Shimizu said the investment period of five years will be followed by a holding period of 15 years, and then an “exit period” of five years.