Japan Post Bank said it achieved 140 billion yen ($890 million) in net realised gains from private equity (PE) in the first half of the fiscal year ending March 2025, which progressed “at a pace exceeding last year”.
The previous fiscal year saw 255 billion yen in gains for the bank, with the first half contributing 115 billion yen. Meanwhile, the largest biannual gain was in H1 2022 at 149 billion yen.
At this pace, Japan Post Bank could surpass its annual target of 200 billion in net realised gains.
The development indicates stronger exit activity and monetisation, while its PE portfolio continued to show strong underlying company performance, reflected in the increase in unrealised gains. This category reached 1.2 trillion yen during the reporting period, bringing the total value of the PE portfolio to 7.6 trillion yen ($48 billion).
Overall performance remains healthy and is meeting targets. Net IRR in the first half stood at 8.1% compared to the target of 8%, while net TVPI was 1.28x versus the plan of 1.3x.
Under its diversification strategy, Japan Post Bank has increased investments in cash flow-generating assets such as mezzanine and infrastructure. It is focused on primary investments, while maintaining a 10% commitment to secondary strategies.
“Since 2018, in anticipation of potential downturns in distributions to paid-in capital (DPI), we increased our target allocation to mezzanine, infrastructure, and other cash flow-generating strategies to around 30%,” Hideya Sadanaga, the bank’s Executive Managing Director and Head of Private Equity Investment Department, told DealstreetAsia in a recent interaction.
He explained that this adjustment has worked out effectively since the market slowdown, as cash flows from these strategies supported DPI when capital gains were limited.
Similar to Japan Post Bank, other Japanese limited partners (LPs) remain committed to alternative investments.
Japan Investment Corporation has recently launched another $5 billion PE vehicle targeting domestic buyout projects in the industrial space.
Meanwhile, the Government Pension Investment Fund, since 2017, has increased its commitments to alternatives from 0.24% to 2.86%. The pension giant has even recently built a performance data pool for future effective deployment.
