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Japan’s GPIF Grants Mitsubishi UFJT Domestic RE Mandate, Eyes Performance-Based Fees for Managers

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Japan’s Government Pension Investment Fund (GPIF) has granted a mandate to Mitsubishi UFJ Trust and Banking to handle its domestic real estate investments in Japan, which will likely focus on blue-chip core office properties in Tokyo through the creation of a fund-of-funds. GPIF put out a call in April to real estate and infrastructure managers after confirming that it was planning on allocating 5% of its portfolio towards alternative asset classes and was looking to expand its investments in global core real estate and infrastructure.

The world’s largest pension fund is also reportedly considering shifting to a performance-based fee structure for its asset managers in an effort to improve returns and reduce costs. Under the new system, managers that meet their return targets will be paid similarly to how the they are now. Any returns beyond that goal will net their progressively greater rewards. Returns will be evaluated on time spans of three to five years to promote long-term growth over short-term returns. The changes will initially only apply to the more than 50 active equities managers under GPIF’s employee, and are scheduled to go into effect in April of 2018.

“Actively managed Japanese stock funds used for GPIF assets did not earn their keep over the past decade, with their investment returns undershooting index growth by 0.04 percentage point despite the funds being paid higher than passively managed funds. The GPIF hopes performance-linked fees will change this around,” said President Norihiro Takahashi, who earned the top spot in the Sovereign Wealth Fund Institute’s Public Investor 100 annual ranking for 2017.

Hiromichi Mizuno, GPIF’s chief investment officer since 2014, has been a vocal advocate for adjusting the cost structure used by active asset managers, and is reportedly involved in plans to introduce artificial intelligence and big data analytics into the fund’s financial modeling sometime in 2018.

Chuck Grassley Leaves Judiciary for Senate Finance Chair

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U.S. Senator Chuck Grassley, age 85, is leaving the Senate Judiciary Committee as chair. He will become Chairman of the Senate Finance Committee next year. The Iowa Republican has served as chairman of the Judiciary Committee since January 2015. Chuck Grassley served as Chair of the Senate Finance Committee in 2001 and from 2003 to 2007.

Grassley is replacing Senator Orrin Hatch (from Utah) who is retiring from the Senate. Replacing Orrin Hatch in Utah as Senator, is former Republican Presidential candidate Mitt Romney, who lost the 2012 election to Barack Obama.

“Looking ahead, at the Finance Committee, I want to continue to work to make sure that as many Americans as possible get to experience this good economy for themselves,” said Senator Grassley in a statement. “That means working to provide Americans with additional tax relief and tax fairness so they can spend more of their hard-earned money on what’s important to them.”

The Committee on Finance is one of the original committees established in the Senate and was first created on December 11, 1815. The committee deals with a whole matter of issues including taxation, revenue, customs, trade agreements, Social Security and more. It is considered to be one of the most powerful committees in Congress. In addition, the Committee on Finance has jurisdiction over both Medicare and Medicaid.

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Liberty Mutual Inks $1 Billion Risk Sharing Agreement with OPIC

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Liberty Mutual Insurance inked a special deal with the Overseas Private Investment Corporation (OPIC), the U.S government’s development finance institution, to help facilitate investment in challenging markets. The deal entails forming a US$ 1 billion risk-sharing agreement to facilitate private sector investment in developing markets. OPIC recently received a new mandate from Washington D.C., armed with more capital and flexibility.

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Keppel Infrastructure to Acquire Ixom from Blackstone

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Keppel Infrastructure Fund Management Pte Ltd, in its capacity as trustee-manager of Keppel Infrastructure Trust, through its wholly-owned subsidiary, has entered into a share sale agreement with certain funds managed by Blackstone and certain management sellers for the proposed acquisition of a 100% interest in Ixom HoldCo Pty Ltd (Ixom). The enterprise value for Ixom is A$ 1,100 million. The equity value for Ixom is A$ 777 million.

Ixom is an industrial infrastructure business in Australia and New Zealand. The company supplies and distributes water treatment chemicals. The Ixom Group is the sole manufacturer of liquefied chlorine in Australia, as well as a major provider of manufactured caustic soda.

The proposed transaction will be initially funded via debt.

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