Japanese Pensions Tap U.S. Market –

NEW YORK – For the first time, some of Japan’s $1.5 trillion in pension money has been invested with a United States-based private equity group.

La Jolla, Calif.-based Pacific Corporate Group in January closed a $100 million fund-of-funds co-sponsored by Mitsubishi Corp. Capital that only has Japanese institutional investors as limited partners, including Daido Life Insurance Co. and Mitsubishi Corp. Pension Fund.

MCC-PCG International Private Equity Fund will invest in 12 to 15 North American and European private equity funds, including buyout funds, said Kelly DePonte, the chief operating officer of Pacific Corporate.

“Up until a couple of years ago, it wasn’t legal for Japanese pensions to invest in U.S. private equity funds,” DePonte said.

Until recently, Japanese pensions were restricted to investing mostly in Japanese bonds and stocks. But an aging population and the poor performance of many pensions in that country recently has convinced government officials to support alternative investments, DePonte said.

Fund-of-funds typically charge a management fee of between 1% and 1.25%, and sometimes include a carried interest split of approximately 5%.