Nippon Life has decided to invest close to JPY 350bn (USD 3.2bn) in overseas real estate and infrastructure funds over the next five years, a company spokesperson said today.
The Japanese insurer will allocate JPY 282bn to real estate and JPY 65bn to infrastructure through its asset management units in the U.S. and Europe.
The investment is much bigger than the insurer’s outstanding investment to the alternative category, which currently amounts to roughly JPY 200bn, the spokesperson said, without giving details such as the breakdown of the allocations.
The spokesperson said the insurer estimates average returns of 8% from the new investment over the five-year period.
The move underscores the institutional investor’s efforts to step up efforts to park its money in alternative assets such as infrastructure, at the time when the Bank of Japan’s accommodative monetary policy is putting downward pressure on long-term rates.
Japanese institutional and pension investors have found that alternative assets can earn stable returns at a lower risk than by investing in stocks and bonds.
For instance, Japan’s Government Pension Investment Fund (GPIF) said in July last year that it increased its global infrastructure exposure by 50% to JPY 293.5bn as of March 2019 from a year earlier.