US - The $130bn California Public Employees' Retirement System (CalPERS) has approved a $200m investment in The Taiyo Fund - a fund that will employ corporate governance activism to try to turn around underperforming publicly traded companies in Japan.
Taiyo Fund Management (TFM), a privately held limited liability corporation, will serve as the general partner of the fund. TFM is a joint venture between Monterey, California-based Taiyo Pacific Partners (TPP) and WL Ross (WLR), a New York-based investment firm founded in 1997 by Wilbur Ross. TPP and Ross have targeted to raise $1bn for the fund. CalPERS will be a 20% equity owner in the fund.
The Taiyo Fund will make significant investments in a small number of publicly traded companies in Japan and use its influence as an active investor to effect corporate governance, financial and operational change to benefit share owners.
“Our experience indicates that active corporate governance strategies have proven successful and add value to our investment portfolio,” said Sean Harrigan, president of CalPERS board of administration.
“We can expect that shareowners will play a greater role in the Japanese markets, contrary to the traditional control of large banks and management. We believe the time is right to invest in this kind of partnership in Japan.”
The Taiyo Fund will be governed by a five-member board consisting of principals of TPP and WLR. Wilbur Ross will chair the fund’s investment committee.
CalPERS participation in The Taiyo Fund increases the pension fund's exposure to Japan corporate governance funds to $400m.
Last year, CalPERS made a $200m investment in Tokyo, Japan-based SPARX Asset Management Company.
Both funds are part of a $1.2bn investment allocation to external active corporate governance managers in the US, Japan and continental Europe made by CalPERS.
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