2005 Reports

Investing in private equity: The Japan Roundtable on Alternative Investments

Columbia University. Center on Japanese Economy and Business

Although Japanese institutional investors continue to favor hedge funds and funds of hedge funds over other alternative investments, more and more Japanese pensions, banks, and insurance companies are now seriously exploring opportunities in private equity. How can Japanese investors effectively identify and conduct due diligence on promising private equity funds? If such funds prove attractive, how can they obtain access in cases where capacity is limited? Once invested, what methods are available to these investors to accurately value the private equity portfolios and monitor the ongoing operations of their fund managers? And how should they measure these managers' performance? To examine these and related questions, the Program on Alternative Investments hosted its second seminar and roundtable in Tokyo on March 11, 2005. Organized and moderated by Dr. Mark Mason, Program Director, the seminar and roundtable featured as principal speakers Andrew Golden, President of the Princeton University Investment Company (Princo); John Alouf, Senior Investment Officer, Private Equity, at the Virginia Retirement System (VRS); Toru Masuda, Senior Manager in the Global Credit Investment Management Department of Sumitomo Trust & Banking; and Akihiro Nakamura of the Pension Fund Association of Japan. These proceedings were divided into two main sessions. The first session was in the form of a seminar with participants drawn from the Japanese public and private pension fund communities, and the second session was in the form of a roundtable discussion with representatives from the Japanese banking and insurance communities. This report covers the initial presentations by the featured speakers together with the subsequent question and answer periods that followed.