Introducing Infrastructure Funds on Tokyo Stock Exchange

Transcription

1 Discussion purpose only Introducing Infrastructure Funds on Tokyo Stock Exchange October 22, 2012 Tokyo Stock Exchange, Inc Tokyo Stock Exchange, Inc. All rights reserved.

2 Executive Summary 1. TSE measures to support recovery of corporations and regions affected by the Great East Japan Earthquake The Great East Japan Earthquake and subsequent tsunami along the coast of the Tohoku region caused extensive human and material damage. Widespread infrastructure problems and damaged supply chains disrupted production, raising concerns over national economic stagnation and a loss of international competitiveness. On April 15, 2011, TSE announced measures to support recovery efforts. In the plan, we declared that we were considering new recovery-related products. 2. Beginning of Feed-in Tariff (FIT) in Japan A new FIT 40/kWh (US$0.50) for 20 years for solar power plant systems came into effect on July 1, The rate will be reviewed annually for new systems connecting to the power grid. Some Japanese financial institutions such as asset management companies, securities firms and banks, have begun planning to create infrastructure funds to invest in solar power plants. 3. Airport management concessions in Japan Since the introduction of PFI (Private Finance Initiative) in 1999, the total amount of PFI in Japan has reached about 4.7 trillion (US$59 bil.). In January, the Japanese government announced plans to privatize 27 government-run airports. The process of entrusting airport management to the private sector is scheduled to start in

3 1. TSE measures to support recovery of corporations and regions affected by the Great East Japan Earthquake Initiatives to support recovery Promote listing of financial products which contribute to fundraising for recovery Promote Listing of Recovery-related ETFs Encourage creation and listing of recovery-related ETFs, such as ETFs tracking an index composed of companies contributing to recovery of damaged infrastructure Promote Listing of Recovery-related REITs Encourage creation and listing of recovery-related REITs, such as REITs incorporating rental housing for disaster-afflicted persons, etc. Support Development of New Recovery-related Products Proceed with rule revisions for business-type funds which support fundraising of recovery business and affected corporations (recovery fund, infrastructure fund, etc.), and support development of listed products which contribute to mid-term financing for recovery business, etc. The latent need for investments in renewable energy facilities, especially solar power plants, is gradually surfacing. TSE is exploring the possibility of accommodating such needs. 2

4 2. Beginning of Feed-in Tariff (FIT) in Japan On July 1, a new act took effect requiring utilities to purchase electricity generated from five renewable energy sources at a fixed price for a set length of time, under a scheme known as a FIT. Some financial institutions are exploring the possibilities of creating investment vehicles which invest in authorized power-generation facilities. A fixed price could be a source of stable and attractive returns Especially retail investors are likely to be interested in such investment opportunities Supply electric power Sell electric power Consumers Electricity bill + Feed-in tariff Annual decision on price and term Power Company Ministry of Economy, Trade and Industry (METI) Agreement Purchase electric power at fixed price and term Annual decision on price and term Specified Suppliers Authorized powergeneration facilities Approval METI regularly verifies Specified Supplier s stable power-generation capacity 3

5 3. Airport management concessions in Japan Japanese government is planning to sell rights of airport management and operation of 27 government-run airports. In addition, heavily-indebted Kansai International Airport is reportedly planning to sell its management rights to the private sector in Currently, investment companies and investment trusts are NOT allowed to set concessions as assets under Japanese law. However, there is opinion that airport management concession offers the prospect of stable and attractive returns. TSE considers its scope of infrastructure funds whether or not concessions are suitable to be incorporated as investment assets. Provide services Private Operator Consumer Delegation Usage fees Usage fees Entrust concession Governments (national or local) Investment Vehicle (Airport Management Concession) Debt Equity Fees for concession The government maintains its ownership of the infrastructure Financial Institutions Investors 4

6 (Appendix I) Basic Scheme for Infrastructure Funds (1) Investment company scheme Equities of the investment company are listed on TSE. Management Company Usage fees Consumer Provide services Investment Company (Infrastructure fund) Investment management agreement Operator Lease contract Debt Borrowing Purchase bonds Financial Institutions as lenders Infrastructure Ownership (direct/indirect) Infrastructure Net (Equity) Listing T S E Trade Investors Usage fees / revenue from sales of electric power / Lease fees Dividend 5 5

7 (Appendix II) Basic Scheme for Infrastructure Funds (2) Beneficially certificate issuing trust Trust beneficiary certificates are listed on TSE. Similar to securitization, hence additional investment is NOT allowed. Usage fees Consumer Provide services Trustee Account (Infrastructure fund) Trust contract Settlor Operator Lease contract Debt Borrowing Purchase bonds Financial Institutions as lenders Infrastructure Ownership (direct/indirect) Infrastructure Usage fees / revenue from sales of electric power / Lease fees Net (Equity) Listing T S E Trade Dividend Investors 6

8 Matters to note regarding this material This document was created solely for the purpose of providing information. It was not prepared as disclosure material pursuant to the Financial Instruments and Exchange Act, for the purpose of soliciting investment, or for recommending transactions with specific securities companies. Tokyo Stock Exchange, Inc. (TSE) is not be liable for any damages or losses incurred due to the use of this material. While every effort has been made to ensure the accuracy of the information in this material, TSE does not guarantee that information in this material is free from error or omissions. This material contains a simple explanation on REIT, etc. and does not cover all aspects of the subject matter. The content of this material is subject to change without prior notice. Information on past periods is based on actual performance, and are not forecasts of future results. All rights to this material belong to TSE. Reproduction or redistribution, etc. for any purpose, by any means whatsoever, whether electronic or mechanical, is strictly prohibited.