The two Japan Post Holdings group companies are seeking alternatives to Japanese government bonds as they struggle to cope with low interest rates. They plan to take a more active investment approach, targeting companies with high growth potential.
The new company, JP Investment, will be capitalized at 1 billion yen to 2 billion yen. Japan Post Bank will hold a 50% stake, with Japan Post Insurance holding 25%. The bank will dispatch managers, and JP Investment's management will supply the rest of the capital.
The fund will be financed by Japan Post Bank but will also draw money from outside the group.
JP Investment will focus largely on startups. Japan Post Holdings already has a venture capital unit for developing businesses, but the new entity will be purely for investment.
The plan is to have JP Investment retain stakes for five to 10 years, earning dividends and profits from share listings.
Japan Post Bank has already sought to diversify its investments by turning to U.S. Treasurys and Japanese stocks in addition to JGBs. Besides managing funds in the market, the bank has invested in domestic companies through the funds of regional banks and other organizations. The amounts, however, have been limited to several hundred million yen per investment.
The bank is under pressure to secure profits through more significant investments.
As a portfolio manager, it will be up to Japan Post Bank to select targets and solicit funds from other financial institutions. The new company will be included in a three-year management plan that takes effect in April.