Nippon Life clinches first Australian project finance

The Japanese insurer’s loan covers more than 20% of the total refinancing package for the AMP-backed desalination PPP in Melbourne, the largest facility of its kind in the southern hemisphere.

Nippon Life Insurance, one of the largest insurance companies in Japan, has lent A$176 million ($138.3 million; €117 million) to refinance a desalination PPP project in Melbourne.

The loan to the Victorian Desalination Plant will refinance the existing debt and support the operation of the facility, which commenced in 2012. The Japanese insurer said it joined the loan syndication process from the primary phase and signed the agreement last week, covering more than 20 percent of the total loan facility. According to media sources, the total size of the refinancing package stands at around A$800 million.

Nippon Life signed the United Nations Principles for Responsible Investment in March 2017 and allocated 1.5 trillion yen ($13.3 billion; €11.3 billion) to be invested in “growing fields” – which include ESG bonds and social infrastructure financing. It said this latest deal, which marks its first project finance transaction in Australia, is part of its commitment to the agreement.

The Japanese insurer noted that the Australian desalination facility it is backing is among the largest in the world. Sponsored by AquaSure Finance, the A$3.5 billion facility is capable of supplying water to a third of the total population of Melbourne annually under a contract ending in September 2039. It is also operated with the renewable energy generated from the wind farms from the state of Victoria.

Sydney-based AMP Capital acquired a 5.2 percent stake in the project from local construction company Pacific Partnerships in October 2016 for an undisclosed sum.

The deal follows Nippon Life’s debut overseas project finance loan in August this year – when it committed around $158 million to a large-scale healthcare PPP in Turkey, which was co-financed with peer Dai-ichi Life.