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Calpers invests in Japan
SAN FRANCISCO (Reuters) -- Calpers, the leading U.S. pension fund, said Monday it will invest $200 million in a Japanese restructuring fund, a bet that Japan's long-faltering stock market may finally be ready for a turnaround. The fund marked Calpers' second foray into turnaround funds specifically targeted at Japan, where corporate management has traditionally been shielded from pressure to reform from outside shareholders and independent directors. "We believe the time is right to invest in this kind of partnership in Japan," said Sean Harrigan, president of Calpers' administration board. "We can expect that shareholders will play a greater role in the Japanese markets, contrary to the traditional control of large banks and management." Japanese stock prices have languished at 20-year lows after five straight losing sessions, amid deep worries about the nation's financial system. The benchmark Nikkei 225 index has lost some 80 percent of its value since its peak in 1989. But as Japan's troubled banks shed stock in their corporate borrowers, Calpers and other foreign fund managers have stepped in to target stakes in companies they see as undervalued or ripe for restructuring. The Calpers fund will be a partnership between New York-based turnaround specialist firm W. L. Ross & Company and Monterey, California-based Taiyo Pacific Partners. Calpers said it would hold 20 percent of the Taiyo Fund, which was seeking another $800 million in investment. W. L. Ross already manages $1.6 billion of investments in Japan, including three funds and stakes in several companies. Calpers said the fund would seek to use its activism in corporate governance to help turn around a small number of poorly performing, publicly traded Japanese companies valued at between $200 million and $3.5 billion. "The principals of this fund will have a successful track record in unlocking value in Japanese corporations through reasonable corporate governance efforts," Calpers investment committee chair Rob Feckner said in a statement. Calpers invests in similar funds in the United States and Europe. As of Jan. 31, its total investment portfolio was valued at $131.4 billion. In January Calpers concluded a $200 million deal with Japanese manager Sparx Asset Management Co to set up a joint venture, Sparx Value GP, that also seeks to use pressure for corporate governance reforms as an investment strategy. "Our experience indicates that active corporate governance strategies have proved successful and add value to our investment portfolio," Harrigan said. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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