Mizuho Global Alternative Investments (MGAI) plans to launch its second global infrastructure debt fund in 2Q18.
The asset manager’s inaugural infrastructure debt fund – the JPY 33bn (USD 309.8m) Cosmic Blue PF Trust Lily Fund – is “almost fully deployed,” investment professional Cunyu (Jack) Wang told Inframation.
The second fund is targeting to raise JPY 50bn, according to Wang. Its name and length of life has not yet been decided.
The speed of deployment of the second fund is expected to be slower than for the first fund, as it will invest in greenfield projects, which take longer to deliver returns. The fund will mainly focus on brownfield projects, however, and target core infrastructure assets.
Apart from a few greenfield projects, the fund will invest in senior project finance debt backed by operating projects which have secured long-term contracts to receive fixed payments, such as off take agreements.
The target return is 200 basis points over the base rate for any given project, such as LIBOR for US dollar funded projects.
Like the first fund, the second fund will have a mandate to invest globally. The first fund has invested in around ten projects: which are located in Europe and Southeast Asia apart from one in North America and one in the Middle East.
Wang said it will invest around USD 30m each time, but the size of the projects invested in could range from USD 100m to USD 1bn. The fund will not take more than 50% of a project’s debt.
The Cosmic Blue PF Trust Lily Fund has been lending alongside Mizuho Bank. The group was seeking to “expand the whole project finance business by using asset management,” and was not replacing lending by Mizuho Bank, Wang explained.
MGAI’s first infrastructure debt fund – the Cosmic Blue PF Trust Lily Fund – has a 20-year term.