Dai-ichi Life commits €80m to M&G’s infra debt fund

The Japanese insurer has emerged as an anchor investor in M&G’s European infrastructure debt fund as the UK asset manager looks to raise €286m from Asian LPs.

Dai-ichi Life Insurance, one of Japan’s largest life insurers, has become the anchor investor in a £250 million ($334 million; €286 million) Europe-focused infrastructure debt fund, which it “co-organised” with UK asset manager M&G Investments.

The Japanese investor has committed £70 million to the M&G Infrastructure Loan Fund, a vehicle launched in March this year, becoming the largest investor in the vehicle to date, a Dai-ichi Life spokesman told Infrastructure Investor.

The spokesman added that Dai-ichi co-organised the vehicle, by helping design the fund scheme. The vehicle is targeting a return of GBP LIBOR plus around 200 basis points.

The debt fund will invest in project finance loans and bonds, mainly for PPP projects and infrastructure projects such as railways, schools and hospitals in European countries, the company said in a statement. These projects are expected to be less susceptible to economic fluctuations, it noted.

“By investing in the fund, the company aims to further expand investment opportunities in attractive project finance loans and bonds by utilising M&G’s network with Japanese and global commercial banks,” the Japanese insurer said, adding that the company diversifies its investments into infrastructure project finance and debt funds in Japan and overseas in a bid to achieve better returns in a low-interest rate environment.

“The Infrastructure Loan Fund has recently launched with Dai-Ichi as a seed investor and the strategy is currently looking to raise further money from investors across Japan and Asia. The fund’s first investment has recently been approved and capital is expected to be drawn shortly,” a spokesman from M&G told Infrastructure Investor.

M&G was managing more than $58 billion in infrastructure debt investments across geographies and sub-sectors, as of June 2017, according to the asset manager’s website.

This is the second “co-organised” fund Dai-ichi Life has invested in. The first was the Cosmic Blue PF Trust Lily, launched in 2016 and managed by domestic fund manager Mizuho Global Alternative Investments to invest in overseas markets. The vehicle reached a final close on 33 billion yen ($300 million; €260 million) last August, with Dai-ichi Life contributing 10 billion yen in seed capital.

“In this fiscal year, we continue to invest into this type of fund investments,” the spokesman added.

While Dai-ichi Life began investing in infrastructure debt funds in 2016, the Japanese insurer’s activity in providing project financing to domestic and international infrastructure projects dates back to 2013.

In late 2017, it invested 4.5 billion yen in the form of a long-term loan in the UK’s High Speed 1 concession, and another 4.4 billion yen in Australia’s Victorian Desalination Project.

Dai-ichi Life will continue to increase its exposure to infrastructure and project finance-related investments, while decreasing its allocation to domestic bonds, loans, and domestic stocks, according to the investment policies it has set out for the coming months and until March 2019. As at the end of March, its total assets stood at 36.3 trillion yen.