Global alternatives managers rush to set up shop in Japan

The alternatives space has shown increased activity since the nation reopened after COVID-19. The influx comes as a result of both inbound and outbound capital flows, according to managers.
Global alternatives managers rush to set up shop in Japan

Japan’s asset management industry is getting increasingly crowded.

Not only are international asset managers in general making new hires and working on their buildouts, global alternatives managers are also establishing themselves with boots on the ground.

On March 11, US-based private debt specialist Deerpath announced it was setting up an office in Tokyo. The office will be led by Taichiro “Tai” Watanabe, who joins Deerpath as Senior Vice President and the first Japan-based member of Deerpath’s Investor Partnerships team.

“Our first Japanese investor committed to Deerpath’s Fund 4 which was formed back in 2016. Shortly thereafter, we began traveling more regularly to meet with investors in Japan. COVID abruptly ceased travel to the region and that solidified the need for on-the-ground presence to ensure we were providing best-in-class service to our clients,” Watanabe told AsianInvestor.

Hong Kong real estate specialist Gaw Capital earlier this week announced the hiring of Daisuke Taniguchi as Managing Director and Head of Asset Management in Japan, starting this month.

In his newly created role in Tokyo, Taniguchi will support Isabella Lo, Managing Director and Head of Japan at Gaw Capital, who is co-based in Tokyo and Hong Kong, a spokesperson told AsianInvestor.

US infrastructure investment firm Energy Capital Partners (ECP) also earlier in March appointed Yuki Asari to lead its new Tokyo office as managing director and co-head of Asia investor relations.


The latest wave of professional arrivals began after Japan started to lift pandemic-related restrictions in late 2022. The government did away with its last remaining Covid requirements in April 2023.

Meanwhile, both capital raising and capital deployment trends have spurred the rising number of private-market managers in Japan.

Watanabe explained that the Deerpath will focus on capital raising for its investment strategy of lending to US middle-market companies.

“We have a safety-first culture meaning that we put a lot of focus on minimizing credit losses, providing consistent cash-flows to investors, and sustainable investment practices,” Watanabe said. “We feel that our safety-first philosophy resonates well with Japanese institutional investors because they prioritize minimizing losses and volatility.”

Gaw Capital’s Taniguchi will focus on asset management in Japan, according to the firm’s spokesperson.

Infrastructure investor ECP’s Tokyo office will seek to boost fundraising capabilities in the country as well as investment in the market.

ALSO READ: Interest in Japanese real estate grows despite rate rise prospects

ECP entered a strategic alliance with Sumitomo Mitsui Trust Bank in 2023 to jointly focus on energy-transition investment opportunities in Japan. A spokesperson declined to comment on the new office and Asari’s hiring.

Demand from Japanese limited partners for private capital managers tripled between 2017 and 2023, according to alternatives data provider Preqin.

In 2023, the average allocation to alternatives was 23.4% in the survey of Japanese corporate pension funds conducted by JP Morgan Asset Management (JPMAM). That is compared to a share of 12.8% in 2015, and just 5.4% in 2009.

Among a total of 81 Japanese pension funds, including 80 direct-benefit (DB) corporate pensions and one mutual aid association, 29.6% of respondents said in 2023 they planned to increase their alternatives allocation. In 2018, 59.2% of respondents said they would increase alternatives.

Kaguya Komatsu

The share of alternatives allocation is unlikely to increase more rapidly since DB pensions prioritise portfolio diversification, according to Kaguya Komatsu, head of Japan funds business and institutional business at JPMAM, in February.

ALSO READ: Japanese corporate pensions interest in alternatives wanes


Beyond real assets players like Gaw and ECP, the private equity market is also seeing higher demand.

Deal activity reached $25.1 billion in 2023, and $49.7 billion including deals involving direct limited partners, according to Preqin’s Japan Territory Guide.

Japan was the most active buyout market in APAC, by volume, in 2023, according to Angela Lai, head of Asia Pacific and valuations at Preqin’s Research Insights, who spoke to AsianInvestor back in January. Buyout valuations even improved last year while other markets were still seeing weakness.

ALSO READ: Japan’s PE market shows resilience amid global decline

Rising M&A activity has bolstered demand for investment professionals in and around the private equity space, according to Martin Eastgate, managing director of executive search at alternatives recruitment specialist Ferguson Partners, based in Tokyo.

However, market participants are seeing that finding the right hires, from senior levels through to junior levels, can be challenging and take longer than expected, according to Eastgate.

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