State-backed Development Bank of Japan forms $1.6 billion fund

TOKYO, March 12 (Reuters) - State-backed lender Development Bank of Japan launched on Tuesday a 150 billion yen ($1.56 billion) fund to invest in domestic companies.

The fund, which could double in size, is aimed at boosting the competitiveness of Japanese industries, the bank said in a statement, without specifying any sectors.

Private equity firms including KKR & Co LP, Bain Capital and Carlyle Group have urged Japan to cut the role of state-backed funds, saying such money could squeeze out opportunities for private capital and delay restructuring for troubled companies.

The largest state-backed funds -- Innovation Network Corporation of Japan and Enterprise Turnaround Initiative Corporation of Japan -- have the capacity to raise up to $37 billion to inject money into Japanese companies.