Japan's $20 billion state-backed fund seeks to team up with global PE firms

By Junko Fujita and Taro Fuse

TOKYO (Reuters) - Newly formed Japan Investment Corp (JIC), armed with $20 billion of government money, wants to team up with global private equity firms to invest in Japanese companies to boost the nation's competitiveness, the head of the organisation said on Wednesday.

Japan Investment Corp has taken over the role of the Innovation Network Corporation of Japan (INCJ), one of the country's state-backed funds that was set up to accelerate growth of domestic companies.

Instead of investing directly in companies, JIC will create funds with private equity firms, sovereign wealth funds and institutional investors, to invest in corporations.

Large foreign equity funds should be able to benefit by teaming up with JIC, said Masaaki Tanaka, JIC's chief executive officer in an interview with Reuters.

"The biggest difference between us and foreign private equity firms such as KKR, Blackstone and Bain Capital, is that we are a long-term investor," he said.

"There is a prejudice (in Japan) against foreign private equity firms but if they team up with us, they can overcome that obstacle," he added.

If JIC makes co-investments with private equity funds and the funds want make an exit earlier, JIC would be willing to buy their stakes, Tanaka said.

Smaller Japanese private equity firms can also benefit by teaming up with JIC as they could target larger deals, he said.

Besides a private equity fund, JIC also plans to set up an engagement fund, which would own around 5 percent stakes in companies. JIC plans to make proposals to improve corporate management, a latest sign of the country's commitment to shake up corporate Japan.

In addition, JIC plans to set up venture capital fund as well as a fund that targets overseas firms.

($1 = 112.4500 yen)

(Reporting by Junko Fujita; editing by David Evans)