APAC: Mitsubishi sets up Japan-focused infra fund

11 December 2017 - 12:00 am UTC

Japanese trading house Mitsubishi said today that its wholly-owned subsidiary has set up what would be the nation’s biggest infrastructure fund of up to JPY 100bn (USD 880.9m) in size.

The Marunouchi Infrastructure Investment Limited Partnership reached a JPY 30bn first close on 30 November.

“We are in specific talks” to buy some infrastructure assets such as energy and transportation assets, Marunouchi Infrastructure Investment chief executive Shinichi Nao told Inframation.

The fund is planning to buy infrastructure assets including railway and roads owned by private sector companies, but later will likely broaden its scope to those included in the list of the government’s concession deals.

Limited partners in the fund include Mitsubishi, Mizuho Bank, Toho Bank and the Private Finance Initiative Promotion Corporation of Japan along with pension funds, commercial banks and business enterprises.

Additional commitments are expected to bring the fund to a targeted level of JPY50bn in the first half of 2018. Then, the fund aims to increase the size to the maximum of JPY100bn.    

In a statement, Mitsubishi said its group companies have a track record of managing investors’ capital and executing investments in infrastructure assets outside Japan since 2012, including electricity distribution networks and toll roads in the US and Europe.

“We are in a good position to leverage our investment management capabilities to successfully launch this fund to invest in infrastructure in Japan,” the company said.

The fund is focusing on investment in a broad range of infrastructure assets in Japan, making it the nation’s first diversified infrastructure fund.

The Marunouchi Infrastructure Investment Limited Partnership “will invest in a portfolio of asset across all major infrastructure sectors,” namely energy, transportation and utilities according to the statement.

Prime Minister Shinzo Abe’s administration has been pushing forward selling the rights to operate publicly-held infrastructure assets including airports, water systems and ports.

The Japanese government is considering whether to add publicly-owned hydro power plants, industrial water facilities and forestry to the list of assets to be run as infrastructure concessions.

In addition to publicly-held infrastructure assets – worth several hundred trillion yen in value – there are a large number of infrastructure assets owned by the private sector, said Mitsubishi. These assets were originally constructed during Japan’s post-war growth period more than four decades ago and need to be modernized. This provides an opportunity for the fund to play a greater role in developing and maintaining these assets.

Despite a steady run of airport concession deals in Japan, privatizing parts of the water supply system has met with controversy. The general public is suspicious about entrusting these assets to commercial entities.

“I think it is meaningful to help support a fund flow,” said Nao, explaining that having public pension funds as stakeholders will help ease public concerns.