GIC ‘excited’ by Japan as it seeks to engage more with firms
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GIC is hunting for more deals in Japan as the governance overhaul and end of deflation make the market more attractive.
PHOTO: LIANHE ZAOBAO
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TOKYO - GIC sees more opportunities to engage with Japanese companies to help them boost returns following a raft of governance reforms in the nation.
The Singapore sovereign wealth fund is “excited” by prospects in Japan and hunting for more deals as the governance overhaul and the end of deflation make the market more attractive, said Mr Bryan Yeo, deputy group chief investment officer.
“We think the initiatives that policymakers have put in place in recent years have really given them that impetus to start thinking harder,” Mr Yeo said in an interview in Tokyo. “In the last one to two years, we’ve had a lot more constructive dialogue around potential solutions to get better value creation and, as a result, higher stock prices.”
In his first interview since taking on his new role, Mr Yeo said the company plans to grow the team of 40 staff looking at deals related to Japan and expects the pipeline to grow. His comments come after a multi-year lull in the company’s global allocations to Japan. The country as a proportion of GIC’s overall portfolio dropped to just 6 per cent in 2023, from 12 per cent as at March 2019.
Japanese stocks surged to a record in 2024, a milestone that analysts and investors have at least in part attributed to efforts by companies to boost shareholder returns.
“The fundamentals and valuations in corporate Japan, including real estate, are looking quite positive,” said Mr Yeo. “The deal pipeline where we sit today is significantly larger than what we saw going back three years or five years ago.”
Mr Yeo said GIC’s talks with companies are different from activist investors in Japan who try to seek change by putting in shareholder proposals or publicly calling for certain goals or management changes.
“We actively engage and find solutions, outcomes and strategies that can help the company grow,” Mr Yeo said. “The potential is there, the key thing is for us and our partners and corporate Japan to really be able to catalyse that and get things going.”
Some of those opportunities could be discussions with the companies to sell off underutilised real estate or non-core business holdings, Mr Yeo said.
GIC is one of the world’s biggest sovereign wealth funds.
While the investor does not reveal its assets under management, it is estimated to control US$769 billion (S$1.04 trillion) in holdings, according to consulting firm Global SWF.
Despite GIC reportedly being in the process of selling several high-profile properties, its head of Japan Ken Sugimoto said the real estate market was entering “unprecedented territory” as inflation, wages and interest rates all rise.
“We haven’t seen this in the past 35 years,” Mr Sugimoto said. “We believe the Japan real estate market is very good, fundamentally good. It’s very deep, liquid and transparent.” BLOOMBERG
