Dai-ichi Life Holdings, one of the biggest insurance companies in Japan, has committed ¥20 billion ($176.5 million; €155 million) to the new infrastructure debt fund launched by Asset Management One Alternative Investments (previously known as Mizuho Global Alternative Investments), to become an anchor investor.
AMOAI is planning to raise ¥100 billion for Cosmic Blue PF Lotus FCP-RAIF and will invest in 15 to 20 projects across the infrastructure sector worldwide.
“Japanese investors are interested in infrastructure debt because it generates very stable income for long periods of time,” Jack Wang, a fund manager at AMOAI, told Infrastructure Investor.
“In the current market, Japanese investors can’t get any yields from investing in traditional assets such as Japanese government bonds or other fixed-income strategies. In this sense, infrastructure debt is a great alternative for them,” he added.
The yen-denominated fund will have an investment period of five years and aims to achieve average returns of 200 basis points plus base rate on a portfolio basis, Wang said. The average ticket size will range from $10 million to $60 million.
Unlike Cosmic Blue PF Trust Lily, which Mizuho launched in 2016, the new vehicle will pursue deals in both the primary and secondary markets.
“We are building relationships with various banks that might have primary or secondary opportunities for us,” Wang said. “For primary opportunities, a lot of these banks are involved in project finance loans and loan syndication.”
Wang stated that they see Mizuho Financial Group, the majority stakeholder in AMO, as a “possible originator of deals,” but that the fund won’t differentiate between Mizuho and other institutions.
“We make sure that all risks regarding conflict of interest are properly managed. We have set up quite elaborate mitigation measures, so our investors can feel comfortable.”
Dai-ichi Life has shown a strong appetite for infrastructure debt across the world. Aside from its ¥10 billion commitment to Cosmic Blue PF Trust Lily which closed on ¥33 billion in August, the insurer was also the anchor investor in the M&G Infrastructure Loan Fund and has participated in the financing of the UK’s High Speed 1 rail project and the Victorian Desalination Project in Australia. At the end of 2017, the firm had invested more than ¥100 billion in nine deals.
The announcement of Dai-ichi Life’s anchor investment came as AMO – owned by Mizuho Financial Group and Dai-ichi Life Holdings – said it had completed the acquisition of MGAI.
Mizuho Bank agreed to sell MGAI to AMO in June, citing negative interest rates and “other factors” that have led to a more challenging investment environment. “As a result, asset management methods and investment targets are becoming more diversified and customer needs are undergoing significant changes,” the bank said in a statement at the time, adding that customer demand for alternative investments has been increasing.
“We will be able to better respond to the diverse needs of our customers by strengthening our gatekeeping capabilities and asset management frameworks,” Mizuho Bank said, explaining the reasons for the sale of MGAI.