[Music] hello everyone thank you very much for joining uh we have half an hour uh trying to talk everything about what's happening in Japan as much as possible uh we have perfect speakers with me uh representing the U uh leading Sovereign West fund through leading pension fund and leading venture capital and University and leading uh traditional uh asset management companies being run by America um as well so uh I I just want to give you some background as to why it's so important for us to uh talk about Japan uh in Miami it's a big
deal right because flying from Tokyo to Miami is expensive and timec consuming but uh at the same time it's very difficult to convince uh our stakeholders that we are not here for Beach or vacation right we here for business uh each individual is representing quite sizeable organizations so we have to deal with uh very significant bureaucracy as well um so here's a um uh brief introduction to uh Finn stre Tokyo uh which is a extension of Tokyo Metropolitan government to uh promote and upgrade uh Tokyo as a financial Hub and ecosystem as well uh it's
very important because uh we are experiencing uh significant uh uh uh social issues such as aging populations and the huge deficit of the government Etc so we need to turn around uh otherwise our economy will be de doomed um so uh quickly um here theity Tokyo our mission is to disseminate uh what's going on in Japan without any propaganda as it is and we obtain honest and candid feedback as much as possible uh from uh uh Market participants like yourselves and also we try to attract highly talented Financial professionals to Tokyo so that they can
Inspire and also they can like U uh uh chin up our people we have been doing this very successfully in baseball and soccer football even small uh so we have to do the same for uh investment too and then last but not least we put together a policy propos proposal to the central government to make Tokyo SL Japan more investor friendly um we have speakers representing different U uh um uh institutions and also different um uh you know aspect uh of the U investment ecosystem starting from a government agency sovereing West fund and then endowment
uh Pension funds and then uh uh Asset Management GP Etc so that's why we have a perfect people in front of you okay so I'm want to hand over to na who can talk about his institution and his mission uh yes uh thank you thank you for uh to have interest in the the Japan session and my name is NAA sugimoto in Japan Science and Technology agency which is one of the government agency and I'm co-chief investment officer of Japan University fund and Japan University fund it is a little bit confusing name so people thought
that we are of the University fund or uh some of the uh deep Tech Venture Capital it is not so we are our Sovereign wealth fund for University so the government uh initiated in three years ago government initiated to create a fund with the 78 billion US dollars to support the universities uh to be a world class you know research capabilities and then we utilize the global Financial Market uh for everything like public Equity fixed income credit uh private Equity private debt and real restate and infrastructure so uh we are institutional investors to support financially
the universities and that's a uh to support the Science and Technology of Japan in the future so that will be a very good opportunity and the fundamental long-term fundamental opportunities to invest and then uh I saw you and many of you you know wearing the yellow strap which means they managers so I I'm going to talking I want to talk about also the business opportunity in Japan so our primary mandate is to generate returns through the financial uh market and the other mandate is to be a model case of the asset owners or especially in
the University endowments so our mandate is to be uh sophisticated investors so uh we uh Japan University fund would like to invest a various type of uh fund and uh management so our mandate is maximizing return within the risk tolerance the typical Japanese public pensions or public uh entity and investors are mandated uh to reach a Target returns with the minimum risk but our mandate is to maximizing returns which makes us more flexible investment and and we do Global Investments so we do not have any Home Country buyers so typically Japanese uh investors has the
domestic Equity domestic fixed income and Global uh fixed income and Global Equity but we do not have that kind of domestic and Global so we are Global investment and also uh in the today Global oats event uh we do invest the alternative Investments explicitly and then with the meaningful uh amount so so and the final one is active management so we do we use a passive uh through the index investment and also do you know uh use the active management so this will be uh good business opportunity to the uh Global investment managers because we
have you know uh 78 billion do and then we have to invest a various type of uh strategies with the sophisticated and advanced for the portfolio thank you very much now thank you so um moving on to Shu but uh Japan Japanese Japan has many uh sub uh Subs scaled Pension funds across the country many of them are so Subs scaled um and the government is trying to consolidate and upgrade investment capabilities uh but shigu and his organization has been driving this effort uh without without without government support so he can talk about how Japanese
pension fund um you know Market is transforming so can you talk about it yeah so hi I'm sh Tamaki from penion fund of Japanese corporations so we are defined benefit in so the corporate pension fund but a bit different from a typical uh defined benefit corporate pension fund because as you know so large Japanese corporation have their own corporate pension fund just like Toyota has uh its own Toyota corporate pension fund but that is only for one beneficiary which is the Toyota employees but in s m small Japanese corporation don't have their own corporate pund
that's why we ask or solicit them to join us sort of by using the intermediaries such as Regional Banks local you know sort you know Municipal you know sort of organizations and know CPS tax accountant lawyers and so on and that's sort as a result you know sort of almost in sort of you know uh one company one company is a joining our pension fund on the daily basis every day so as a result you know so monthly contribution to our pension fund is growing so rapidly by more than 35% year on year so that's
why so we have to keep allocating the money to Global talented funds uh mostly alternative investment space so roughly speaking uh 90% 90% of the total asset is invested in alternative investment space one side roughly speaking one side in hedge fund another one side in private set last one in opportunistic more nich type of in sort investment opportunities and uh as you know so mentioned so there are about 12,000 you know uh corporate in sort of pension fund some of them are doing pretty well uh pretty good but others especially M and small corporate M
uh do not work quite well unfortunately so uh there are small usually small like so having less than 100 million Us in the pension fund asset with no investment professionals uh just invest in uh sort of one principal guaranteed product sort of provided by sort of life insurance company so heing just 0.5% or something like that so that is uh you know ridiculous so that's why so we would like to sort consolidate you know sort those type of you know sort corporate pment too but if is here so that those you know um person in
charge of those corporate pension who do not work quite well is rotated so the you know three or four years so due to this you know so three three to four years job rotations so that they don't want to do soort of make a big change during their service period but in sort during that period if sort you know that pension funding so financial status is deteriorating so we can so no longer I know absorb it that is a problem so that's why sort we would like to sort government you know sort to sort promote
sort uh you know Japanese executive especially me and small companies to consider so seriously on consolidation of you know sort of Japanese in know sort of a pension fund that is my uh brief explanation thank you very much um everyone knows that um uh Japan has a good education and the best university in Japan is known uh as University of Tokyo uh University of Tokyo has been producing a lot of smart kits joining uh government agencies and uh largest corporations however uh things has changed so much uh recently 30% of our graduates join uh startup
companies or even starting their own companies um Jun G Kevin uh is representing Venture Capital arm of University of Tokyo and uh uh it's um um very important to understand what's happening because they are trying to become more relevant to the market so uh Kevin would you like to briefly introduce yourself and your organization hi uh my name is uh Jun call me just Kevin so call Kevin but um um so I'm presenting present representing uh University Tok Venture Capital fund and uh one thing the first thing I want to say is you know uh
right now Japanese startups have full full full potential you know of you know Global growth um let me just uh show you this bit first so sorry about this mess but um the center Astro scale uh got an IPO uh uh last year is one of portfol company and the initial valuation was like 1 billion so it's literally unicorn so we're experiencing uh big IPOs and big name on day you know from Japan and um we're now you know uh uh trying to you know increase the number of those you know big IPOs and M
day so uh very very big you know opportunities so usually people when people think about Japan you know maybe uh uh Sakura or you know Fuji M Fuji right but actually um uh more and more younger and maybe people might think people are more conservative you know like my more like hardworking guys but actually a younger generation are more startup oriented and entrepreneurs as you can see you know in this data 600 in start ofia and each year uh we we are running the largest by far the largest uh uh explorator program and we have
accept uh uh newly born 600 you know startups every year and uh we are actually not only running a venture capital fund we're also uh the lp limited partners for Venture Capital firms too 20% goes to the Venture Capital uh firms so uh and the other 8% goes to direct investment altogether uh we have uh our fund itself is 500 million funds but um with those you know uh Venture capitalists and and other Co investment we have uh already invested uh almost 1 billion US dollar uh for the past 10 years okay uh so far
uh uh that's uh that's my job and um uh I hope to you know explain more about the opportunity in Japan okay so David uh and I'm going to uh ask you some question um you know you have been running the U you know most conservative consider to the most conservative and largest financial institutions from an asset management perspective over the last uh several years how do you feel about this running a Japanese organization being American as as an American well first of all thank you very much for inviting me it's great to be in
Miami I actually grew up in uh in South Florida and um originally went to Japan over 40 years ago uh with a few big firms um you've heard of Black Rock and Maryland uh lived in London lived in Tokyo lived in New York but I think the the word is change and change is very good uh in in terms of what's going on in Japan my colleagues here all of them um are in organizations that were set up between three and seven years ago so in the 80s the boom boom years um these organizations would
not be here the model the business model and the social model of Japan is changed dramatically in these 40 years and in terms of your perspective and my personal perspective Japan has become a great opportunity to invest in as a market and a great opportunity if you're interested in setting a business up to tap the financial resources that are in Japan remember there's about 15 trillion usar in household assets that are locked up in Bank deposits that has to change and it is changing um Sumo trust group uh we're a Trust Bank as arasan said
we're very very conservative and I chare the largest asset manager in our group we're the trillion dollar asset management organization that nobody's ever heard of okay we run our businesses through a number of subsidiaries the model is is quite different from a typical us asset manager we have a open architecture platform and so if you have an interesting uh product or investment strategy and you want to tap into that 15 trillion you would come to ourselves or um others like us because what's happened over the years is that Mr Mrs watsab uh the typical sort
of name of the retail Japanese investor um I returned to Japan 11 years ago when I left uh 20 years ago I was in London for 10 years and I came back 11 years ago I was shocked to see that Mr and Mrs watanabe's non-bank deposit asset allocation went from 8020 Japanese assets foreign assets to 280 I should say 20 Japanese assets 80% they're allocating globally and who's the beneficiary of that Global allocation we the Japanese Asset Management industry we do the client servicing we talk to them we give them advice uh on how to
invest but the beneficiary are people like yourselves sitting in the audience who provide the products who provide the investment strategies because we're tapped into on our on our open uh architecture platform we have 70 managers 80 managers and that's across traditional long only liquid strategies fixed income equities private assets we have a venture capital group we have a private equity uh group and um whenever we come here to the United States we talk about this I think Americans are very very focused as as keni said on the domestic markets but actually Japan is back just
ask Warren Buffett he uh he allocated many many billions uh and by the way immunized his uh Yen dollar risk very very easy and if you're a dollar-based investor you actually get paid to hedge given the interest rate differ you don't pay to hedge you get paid you receive to hedge uh when you invest in Yen so um there's a lot to talk about why Japan has now surpassed the Nik has surpassed the 1989 high that was a year ago um corporate governance changes that are really happening they're they're being implemented um we now have
engagement in a lot of activist funds that are coming in and working with Japanese corporations it used to be very a very um tough discussion but now Japanese management is saying okay let us understand what you want to see and maybe that um that plot of land in Tokyo that's still Book value back in 1955 Book value you know maybe we should sell it and we should um you know do a special dividend to our shareholders and then you know keep some Capital to grow so um Japanese corporate governance Chang which started in 2014 with
the um stewardship code and the corporate governance code which has been renewed you're seeing an unlocking an unlocking of assets for shareholders and it's a great opportunity thank the government is totally behind it sorry I know we I know we don't have time but the government's subtly behind it and and Fin City Tokyo is one of the mechanisms that um is here thank you we actually have five more minutes uh to wrap up but uh I'd like to share some uh important data points about Japan um Japan has about 3,950 public companies while in the
US you guys have 4,200 listed companies publicly listed companies right size of the economy us is six times more than Japan however total market capitalization in the US is eight times more right so which means that we have many small public companies in fact uh 2/3 of Japanese public companies are uh considered as micro cap less than $300 million of market capitalization everyone knows maybe Toyota Sony uh Honda uh Panasonic Etc but uh we have many many small companies completely under uh uncovered right uh and then average uh IPO valuation time of the uh valuation
at the time of IPO is 70 to 80 million which is equivalent to series B in the US right so uh so we have a you know micro too many micro cap issues in Japan so uh we have uh less than four minutes but uh each individual can talk about how we can deal with this uh too many micro cap company issue as as well so maybe starting from U large cap names on S&P 500 know topics you know so 500 Index are covered you so almost 100% by S side analyst and the same thing
can be true of M small cap names on you know so last 2000 or you know BBG Europe DM so the small cap index but story be totally different in topic small so sort only 27% of listed in companies on the topic small index are covered by in analyst so remaining 73% uh non cover names and uh actually sort of many sort of hidden je many James Z and S you know um you know first retaining s manufactur of Uno or Zoo used to be there sort of uncovered in sort of names so many years
ago sort Japanese GPS uh especially me small Specialist of independent in sort of Japanese Boutique in sort can prove uh their ability uh to De those un covered in names and identify in good hidden in sort of Gams then they will surely in sort you know attract the money from globally okay Kev Kevin is trying to uh scale uh before IPO so can you touch on this so yeah one idea is to not nure the you know existing uh uh public companies but another idea is to again you know like the example of Astro scale
you know uh create so they spent less than 10 years before it got you know 1 billion valuation so uh and the point is it partnered with uh British government not just Japanese government it went uh just focused on a global market so uh there's a good potential you know in Japanese startup so if you know we you know can ask for you collaboration you know through out outside of you know Japan to to nure the startups to you know get the high valuation together um also we have uh emerging manager program in Japan and
trying to allocate to imer manager through through imer manager to a small company so now we and maybe David can talk a little bit about this we only have it's okay minute and a half now would you like to touch on this sure uh so uh um Japan as a country uh is promoting uh Investment Management industry as as a the Japan University fund is one of them and also uh government set asset owner principles and then uh last year and and then they pushed that emerging manager is very important to grow the ecosystem or
investment ecosystems so this is a government initiative and uh there are so many emerging managers but currently it is a slightly you know uh Gap between the asset owners and the imer managers so we now promoting the intermediatory like fun funds or Gatekeepers or Pro Tokyo is promoting the to create a showcase to be to be visible so that will be you know um energize the Japan Emerging Market uh program David can you also wrap up finally yeah you don't want small companies put pressure on the broker ERS not to list them too early right
that's the reality it happens all over but um emerging manager program uh leads to the point of human capital and talent and human capital and talent is absolutely needed in Japan and it used to be human capital and talent in in financial services and asset management was very domestic now we are open there are many many people from around around the world who are coming and setting up and bringing their abilities into the Japanese market and there's a lot of opportunity and and benefits to partner with a group like Finn City Tokyo we have offices
we have equivalent of an accelerator program for asset managers and and GPS um and you'll see that demand just grow um so yeah so as you heard right Japan is uh trying to transform even though from the US um Japan is quite uh non eventful right we we actually had uh four Prime Ministers over the last four years you know you you you even don't know when the power was transitioned right but Japan is actually probably the only fully Democratic and politically Stable Market and jurisdiction in Asia you have to allocate to Asia but uh
where so in this sense um um it's very important for you guys to uh there are lots of instuction but uh you know revisit uh Japan and uh uh pay more attention to uh Japan so that we can work together as well so fortunately this is the last session here and we're going to stay here so we can discuss further but uh for now let's uh please give a big hand to all the distinguished uh panel speakers thank you much I just had one last thing we're over the uh the sushi is the best please
please come and visit thank you [Applause] [Music] [Applause]
