Mitsubishi UFJ Lease & Finance, Hitachi Capital and Bank of Tokyo-Mitsubishi UFJ are preparing the launch of a new company that will help fund the internationalisation of the Japanese infrastructure industry.
The vehicle, dubbed Japan Infrastructure Initiative Company, will operate as an open financial platform to provide funds on a global base, including equity and mezzanine financing, as well as other services for infrastructure projects. It aims to provide 100 billion yen ($881 million; €834 million) of equity and debt, with a focus on Japanese equipment manufacturers and engineering companies.
Mitsubishi UFJ Lease and Hitachi Capital will each own an equal 47.55 percent stake in the new company while BTMU will hold the remaining 4.9 percent.
The company is expected to be incorporated around January 2017. It will be headed by Naoki Nishida, president and chief executive of BTMU Malaysia.
This initiative is the first effort by Japanese firms to extend financial assistance to other Japanese companies looking to export infrastructure projects, a Nikkei report said. Projects will cover power plants and railways in Asia, Europe and the US.
The Japanese government has been planning to boost infrastructure exports by providing economic stimulus measures and strengthening the financing ability of state agencies such as the Japan International Cooperation Agency. Tokyo aims to provide up to 20 trillion yen in funding for overseas infrastructure over the next five years, Prime Minister Shinzo Abe said in a G7 summit in May.
Its major rivals, China and Korea, also provide support to their infrastructure companies in exploring opportunities in overseas markets. Setting up two financial institutions, the Asian Infrastructure Investment Bank and the Silk Road Fund, China is offering loans to the governments of countries covered under the 'One Belt One Road' initiative, to help develop their infrastructure.
The Korean government, in addition to providing financial packages to emerging countries like Iran, has teamed up with its sovereign wealth fund, Korea Investment Corporation, to launch a $2 billion vehicle which will help Korean companies win projects overseas.