Japan’s Sumitomo Mitsui Trust Bank has launched its second domestic infrastructure fund with a target about four times greater than its predecessor.
SMTB will look to raise about ¥120 billion ($790 million; €680 million) for Japan Infrastructure No. 2 over the next year, a step up from the ¥33 billion raised for Fund I, which is now almost fully allocated.
As of a first close on 1 October, Fund II investors include the Bank of Kyoto, Sumitomo Life Insurance Company, Development Bank of Japan, Hiroshima Bank and Mitsui Sumitomo Primary Life Insurance Co.
SMTB has also invested in the fund as part of its “impact equity” strategy.
SMTB would not disclose the exact value of the first-close commitments.
However, Kazuhisa Ota, general manager at SMTB-backed investment advisor Japan Extensive Infrastructure, which serves as GP for the fund, told Infrastructure Investor the commitments have already exceeded the total for Fund I.
“As of now, we haven’t seen such a big private infrastructure fund in Japan,” Ota said.
Infrastructure Investor data supports this claim, listing the largest pure-play Japanese infrastructure fund as Green Power Investment Corporation’s Renewable Fund II, which has raised about ¥61 billion as of February.
SMTB’s Fund II will aim to draw upon a broader investor base than the financial institutions of Fund I to also include corporate pension funds.
“The introduction of pension funds is very new in the Japanese infrastructure investment market,” Ota said.
“They only invest in the global infrastructure funds like Macquarie, but they haven’t invested in Japanese infrastructure funds so far.”
Historically, utility companies have held most of Japan’s infrastructure assets, which Ota said has limited the opportunities for private investors.
Any infrastructure projects remaining were often too small to be worth investing in, he said.
“Even such a small fund can change the infrastructure investment market in Japan,” Ota said of SMTB’s first domestic infrastructure fund.
“Alongside our activity, the pipelines pile up, and we have a great number and variety of investment opportunities in Japan.”
Under Fund I, those opportunities have expanded from solar PV to a range of sectors including battery storage, data centres and logistics.
Fund II’s remit will be even broader, targeting Japanese projects or companies involved in decarbonisation, digital infrastructure and social infrastructure.
SMTB is targeting a second close by the end of the year, followed by a third close early next year and a final close by the middle of 2026.
AloJapan.com