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Insurance

Nippon Life sets aside $280m for impact investments

Japanese insurer to look at health care, food, climate change solution providers

Nippon Life Insurance is adopting an impact investment strategy.   © Reuters

TOKYO -- Nippon Life Insurance plans to invest 30 billion yen ($280 million) in companies that provide solutions to social and environmental issues three years from now, Nikkei has learned.

In adopting an impact strategy, Nippon Life Insurance hopes to make social contributions through its investments. It will be looking at companies that provide solutions in fields like health care, food and climate change.

Impact investments have been popular in the U.S. and more recently has spread among Japan's institutional investors. In this strategy, the investor does not only focus on bottom lines but also judges the company on its contributions to society.

For example, an investor will not only examine the profits made by a drug research company, but also the number of users it has and how much economic influence it commands.

Nippon Life Insurance will begin by investing 2 billion yen in U.S. private equity firm TPG Capital's impact investment fund within the month. The investment fund is known for its strength in translating a company's contribution to society into data such as gross domestic product. The fund is investing in medical startups as the coronavirus takes its toll around the world, and expects an annual yield of above 10%.

Nippon Life Insurance will work with TPG to learn the ropes, after which it hopes to be able to make independent investments in such companies after three years. The company will invest around 10 billion yen annually in startups.

Impact investment has reached 70 trillion yen globally, gaining popularity with funds such as New York-based Kohlberg Kravis Robert.

Japan has been a slow starter in this segment but this move by Nippon Life Insurance, which manages approximately 67 trillion yen in assets, could prompt other players to follow.

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