Japan Science and Technology Agency, manager of the ¥11 trillion ($76.7 billion; €66.2 billion) Japan University Fund, has made its first two direct infrastructure fund commitments.
JST senior manager of real estate and infrastructure investments Keigo Yumino told Infrastructure Investor the university endowment will gradually increase its direct allocations to infrastructure while continuing to outsource some investments through gatekeepers.
Yumino’s comments on the sidelines of last week’s Infrastructure Investor Tokyo Forum come after JST managing director and head of global alternative investments Tadasu Matsuo revealed at last year’s Tokyo forum that JST planned to begin making direct investments into infrastructure funds by the end of 2024.
The move is part of Matsuo’s strategy to build an alternatives portfolio from scratch.
Alternatives made up 2.8 percent – or ¥311 billion – of JST’s asset allocation as of the end of FY2023.
Yumino said JST will build up its direct investment capability “step by step” while continuing to use funds of funds and gatekeepers where appropriate.
He declined to name the two infrastructure funds to which JST had made direct commitments, but said they were global funds that were familiar to the endowment and did not focus on a particular infrastructure subsector.
JST’s investment managers in the alternatives space include Tokyo-headquartered firms Asset Management One and Tokio Marine Asset Management, and New York-headquartered Neuberger Berman, according to JST’s 2023 Annual Report.
Yumino said that as JST pursues more direct investments, one challenge will be to build stronger communication channels with GPs, both to monitor their existing investment decisions and to consider future investment opportunities with them.
He said JST aims to have as much direct communication with its GPs as possible to build trust and foster long-term relationships.
However, he added that JST does not currently have enough resources to meet everyone personally.
JST’s alternatives management team numbered about 18 as of June 2024.
“In the long run, we should grow our team, and we have to construct a way to monitor investments within the funds,” Yumino said.
“It depends on the GPs; some GPs come to Japan a lot, some don’t, so we approach the GPs by calling or visiting their office to closely monitor the fund.”
He said JST is ready to accept more GPs but cautioned that scheduling time to meet all interested parties is a constraint.
Asked how many GPs have approached JST since the endowment signalled its intention to invest directly, Yumino said: “A lot.”
JST began managing its university endowment fund in 2022 with principal funds of ¥10 trillion and started investing in funds through gatekeepers in 2023.
Through those funds, the endowment has diversified into about 300 assets, mostly in North America and Europe.
JST aims to support student education through annual returns of about ¥300 billion no later than the end of FY2026.
