Mizuho to launch new infra debt fund, targeting over $300m – exclusive

Mizuho Global Alternative Investments (MGAI) plans to launch its second infrastructure debt fund, targeting over JPY 33 billion ($303.6 million; €247.5 million) with greenfield assets included in the investment criteria, according to Jack Wang, an investment officer in the infrastructure team at the firm.

The move towards a new fund launch comes as the alternative investment manager has deployed around 90 percent of its investments in project financing opportunities as of end-January.

“We still want to focus on projects with long-term offtake agreements, stable cash flow, and revenue, but we might have to increase the risk profile [of the new fund] by including several greenfield projects and looking at the primary side,” Wang told Private Debt Investor on January 30.

Wang noted that as the credit spread has been tightening over the last few years, the margins are very low in the projects that they have been reviewing.

“Given the expected returns from our [existing] investors, I think increasing our risk appetite is worthy,” he noted, adding that the project financing fund series is looking to focus on offshore projects only as credit spreads are too tight in Japan.

The manager launched its first project financing fund, Cosmic Blue PF Trust Lily, in July 2016, targeting senior loan facilities for core infrastructure projects, according to a term sheet seen by PDI. The first fund has a 20-year term with an investment period of five years.

In terms of geographic focus, the first fund has invested across Asia, Europe, North America, and the Middle East. It also has several projects in Southeast Asia and Europe, one project in the Middle East and another one in North America.

The fund mainly sourced deals via Mizuho’s platform and had invested in nine projects out of 30 in its pipeline as of end-January.

The alternative investment manager is wholly owned by Mizuho Financial Group, a Tokyo-headquartered bank holding company, with assets under management of JPY 298.8 billion as of March 2017.

Over 95 percent of the manager’s investors are Japanese pension funds.