CDPQ inks first Japan infra deal

The Canadian pension is set to invest ¥70 billion in renewables developer Shizen Energy, in a deal that will also see it enter renewables markets in Southeast Asia.

Caisse de dépôt et placement du Québec has made its first direct infrastructure investment in Japan, committing ¥70 billion ($479.2 million; €475.6 million) to renewable energy developer Shizen Energy.

The deal will see the Canadian pension giant invest ¥20 billion in Shizen, with a further ¥50 billion from CDPQ to be deployed via a co-investment framework with the developer. Founded in 2011, Shizen has largely focused on solar power and wind power projects, as well as small-scale hydroelectric power and biomass.

According to CDPQ’s head of infrastructure Emmanuel Jaclot, the pension had been looking to partner with a Japanese renewables developer for roughly five years before the deal with Shizen was struck, with recent policy changes in Japan favouring the renewable energy sector now sweetening the deal.

“We believe, and so does Shizen, that there is huge room to grow the renewable capacity in Japan,” Jaclot told Infrastructure Investor. “[Japan is] moving from a relatively high feed-in tariff mechanism to something that we think could be more conducive to growing the share of renewables in the power mix of Japan.”

“[Shizen has] been around for a long time building solar and wind [projects] and they’re involved in offshore wind also, which we believe could be a promising sector in Japan in the coming year.”

The largely Japan-focused developer also has a presence in other markets in the APAC region – including the Philippines, Indonesia, Thailand and Vietnam – as well as Brazil, all of which are markets where CDPQ is keen to make an impact within the renewable energy space.

“Shizen is very present in Japan, but they also extend to Southeast Asia and that’s something that has appeal for us. We don’t have a [renewable energy] play in any of these countries yet where Shizen is present,” Jaclot added.

“It’s part of our strategy to invest in the long run and [Shizen] is a developer – they develop and build projects – which for us is key to value creation. We’re a source of capital that can also invest in the operating project, which is an interesting mix for them because that’s going to help them keep and grow their asset base.”

CDPQ declined to comment on its equity stake in Shizen Energy.

Earlier this month, CDPQ marked its first financing of a renewable energy project in Japan, forming an agreement with Singapore-based, APAC-focused renewable energy company Vena Energy for a ¥9.3 billion project bond. The proceeds will finance a 35MW operational solar energy project in Japan.