Daiwa clinches $469m for Hokkaido solar fund

The Japanese vehicle has acquired three solar plants on Japan’s northernmost island, with its local focus in line with the country’s ‘regional economy creation’ policy.

Daiwa Energy & Infrastructure, a renewable energy investment company – part of Japan’s Daiwa Securities Group – has acquired three operational solar power plants on Hokkaido, the northernmost main island in Japan.

Hokkaido Electric Power and Hokuyo Bank (North Pacific Bank), both headquartered on the island, are a main equity investor and a debt investor in the fund, respectively. The former will also oversee the operation and maintenance of the solar plants.

Of the assets acquired, one solar power plant with a 9MW capacity has been operational since February 2016, in Iwamizawa city. The other two – with a 2MW and 1MW capacity, respectively – have been operational since November 2014, in Kushiro city.

Morimasa Matsuda, chief executive of DEI, told Infrastructure Investor: “We closed the fundraising on 27 March, acquired the three solar power plants and kicked off managing the fund on 30 March. DEI has invested 5 percent of the equity portion. Details on other investors, besides Hokkaido Electric Power and Hokuyo Bank, are not disclosed.”   

While the chief executive would not reveal their identity, he did mention other investors in the fund consisted of Hokkaido-headquartered companies and financial institutions.

Matsuda said the fund, which will be managed by Daiwa Real Estate Asset Management, does not intend to raise additional capital. He explained it uses a special purpose company structured as a bankruptcy remote company, a legally separate company from DEI. This is to protect the SPC’s cashflow in case some of the fund investors go bankrupt, Matsuda added.

DEI said the fund’s debt investors and bond investors, including Hokuyo Bank, financed the SPC through green loans and green bonds.

“Japan Credit Rating Agency has said that the fund meets the Green Loan Principles 2018 by the Loan Market Association and the Asia Pacific Loan Market Association, Green Bond Principles 2018 by International Capital Market Association, and Green Bond Guideline 2017 by Ministry of Environment Japan,” Matsuda said.

Conceptualised as ‘local production local consumption’, the fund differentiates itself as investing only in Hokkaido-based solar power generators, DEI said.

“As Hokkaido-based companies have invested in the fund, this project will contribute to the economy of the region, which the Japanese government supports under its ‘regional economy creation’ policy,” Matsuda added.

Including the three solar plants, DEI has developed and invested in solar power plants with total 160MW capacity as well and biomass plants totalling 13MW.