Japanese conglomerate Mitsui & Co and German asset manager Patrizia have reached $110 million in equity for the first closing of their Asia Pacific infrastructure fund with a goal of raising as much as $1 billion to invest in sustainable assets across the region.
Backed by the Development Bank of Japan as an anchor investor, Mitsui and Patrizia are planning to build a portfolio of infrastructure assets across Asia Pacific’s developed markets including tech-linked assets such as data centres and undersea cables. The strategy would also target solar installations and wind farms, as well as healthcare and education facilities in its target locations, according to a joint statement on Wednesday.
“For Patrizia, APAC is a core pillar of our mid-term growth strategy, so we are very excited to again join forces with our partners at Mitsui to drive the growth of our real assets footprint in the region and help us achieve this ambition,” Patrizia founder and chief executive officer Wolfgang Egger said in the news release.
With Mitsui and Patrizia having worked together over the last 15 years, the partners are part of a rising tide of strategies targeting infrastructure opportunities in the region, including a $1 billion ASEAN vehicle which ESR’s ARA Asset Management set up with the Export-Import Bank of China in November.
With the partners having previously teamed up to launch an emerging market infrastructure fund in 2008, this latest strategy, dubbed APAC Sustainable Infrastructure Fund (A-SIF), marks the second APAC-focused infrastructure fund for the Patrizia-Mitsui JV.
With a goal of raising from $500 million to $1 billion in equity, the strategy will focus on mid-sized brownfield opportunities, or existing facilities and sites with redevelopment potential, across target markets including Australia, Japan, Singapore, South Korea, New Zealand and Taiwan.
Around half of the investments will be allocated to the energy sector, while digital infrastructure and social asset groups are expected to each account for around 20 percent of investment, with the remaining 10 percent aimed at mobility ventures.
Aside from developed nations, the vehicle is also considering investing in select developing countries in Asia, as it aims to deliver strong financial returns with positive sustainable outcomes aligned with the United Nations’ Sustainable Development Goals. Other potential infrastructure opportunities include battery storage and electronic vehicle charging stations, the partners said.
“This A-SIF is a new infrastructure fund based on the strong relationship between Patrizia and Mitsui for more than 15 years. We hope to meet the expectations of its investors while further developing our relationship with Patrizia,” said Daisuke Ishida, managing officer and chief operating officer at Mitsui’s corporate development business unit.
The fundraising milestone for the infrastructure vehicle comes less than two months after Patrizia launched a €1 billion ($1.03 billion) Japanese multi-family vehicle late last year, as the German firm continues to expand its footprint in the region.
For Mitsui, the new fund is the latest tie-up with global investors in the real assets world, following a C$400 million (then $319 million) investment it secured from the Canada Pension Plan Investment Board (CPPIB) for its Japanese Data Centre Development Fund in 2021.
The fresh firepower from the newly established infrastructure fund will replenish Mitsui’s pipeline of real estate projects after a series of successful infrastructure transactions.
In May of last year Mitsui reaped some digital infrastructure returns when EQT-backed data centre operator EdgeConnex bought out an Indonesian data centre JV backed by the Japanese firm for an undisclosed sum.
Mitsui is expanding in the infrastructure sector after it sold its remaining 7.7 percent stake in the manager of Singapore’s ESR-Logos REIT to the trust’s sponsor, ESR Group for $25 million in October.