Fortress Investment Group plans to secure $1.9B for Japan's first infrastructure fund-sources

December 27
2:38 AM 2013

Citing people knowledgeable about the matter, Reuters reported that US-based asset manager Fortress Investment Group is planning to gather JPY 200 billion or $1.9 billion to establish the first infrastructure fund in Japan. The sources, who spoke on the condition of anonymity because they were not authorized to talk to the media about the matter, said Fortress intends to use the money pooled in the fund called Fortress Japan Income Fund to invest in roads, airports and other infrastructure.

In the past few years, the government has pledged to sell the rights to operate roads, airports and other public assets in order to bring down debt. This year, it amended its laws so that the rights to operate airports could also be sold, giving new impetus to the government's promise, the report said. 

The process to sell the operating rights of Sendai Airport to public investors by next year were said to have already begun. Plans are also underway to sell the operating rights for the New Kansai International Airport and the Osaka International Airport. A law was passed by the Japanese government two years ago which allowed New Kansai International Airport Co to sell its rights by next year. The said airport is under the burden of a JPY 1.2 trillion debt, the report said.

The sources said Japan's pension funds which are weighted heavily in the government's bonds could find infrastructure to be attractive alternative investments.

Early this month, people familiar with the matter also told Reuters that Japan's Government Pension Investment Fund, the largest public pension fund in the world, and Canada's OMERS will be diversifying their portfolios via infrastructure investments.

The report said the reputation of Fortress in Japan is that of a distressed asset investor, wherein the company gets the assets by purchasing the underlying debt at a discount. The sources said the new fund is geared towards giving more stable and long-term results. 

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