Macquarie to launch Japan joint venture

The Australian bank is planning to launch a JV with a Japanese corporation aimed at power generation and infrastructure.

Macquarie Capital, the corporate finance advisory business of Australian bank Macquarie Group, has signed an agreement with Japanese engineering firm Maeda Corporation to launch a joint venture focused on renewable energy and infrastructure projects in the country, according to a joint statement.

The two firms expect to launch the joint venture by the end of the year, and will initially focus on large-scale solar power generation projects in Japan. Over time, Macquarie and Maeda hope to expand the joint venture to include wind power. Within the first three years, the partners are targeting the development of 300 megawatts (MW) of capacity in renewable energy, expected to total about JPY100 billion (€745 million; $1 billion) of investment. Funding for the joint venture will be on a project-by-project basis.

Beginning with solar projects, Macquarie and Maeda hope to establish a special purpose company, in which both can “leverage their respective expertise” on design, engineering, operation, investment and divestiture, according to the statement. For each project, the partners will invest their own capital and also raise equity and debt financing. Debt financing will mostly come from domestic banks, but a source close to the matter told Infrastructure Investor that Maeda and Macquarie will be funding most of the projects with their own equity.

The source added that the joint venture will be sourcing both greenfield developments and some projects that have already begun construction. Maeda's local roots are expected to give Macquarie better access to domestic deals, and will allow the joint venture to be more efficient.

Macquarie and Maeda also hope to eventually include road and airport concessions among the joint venture’s infrastructure projects. Japan has launched several initiatives to promote infrastructure development in the past year, including the introduction of a feed-in tariff system for renewable energy, post-earthquake redevelopment, and public-private partnership projects related to the 2020 Tokyo Olympics.

“These initiatives have led to an anticipated increase in private investment in these sectors, and the development of an infrastructure market in Japan similar to those in existing markets,” the statement claimed.

Independently, Maeda is already developing wind and solar projects throughout Japan, and has developed a portfolio of infrastructure projects worldwide.

Macquarie, with approximately A$347 billion (€245 billion; $335 billion) of assets under management, itself operates more than 100 infrastructure projects globally through its Macquarie Infrastructure and Real Assets (MIRA) division. Both MIRA and Macquarie Capital have invested in roads and airports in Japan before, but this is the first time Macquarie Group has ventured into renewable energy in the country.