Caisse de dépôt et placement du Québec is making its first infrastructure investment in Japan in a deal with one of that country’s developers of renewable energy.
The Caisse will invest 20 billion yen, or about $185-million, in Shizen Energy Inc., a private company that develops and operates renewable energy plants. The 11-year-old company has completed small solar, wind, and hydroelectric plants in Japan and in Brazil, Vietnam and Thailand.
The agreement is one of two renewables deals announced by a major Canadian pension manager on Monday. Alberta Investment Management Corp. (AIMCo) said it will provide a $150-million line of credit to Tidewater Renewables Ltd., a Calgary-based, Toronto Stock Exchange-listed company.
Tokyo-based Shizen Energy said its three founders started the venture three months after the 2011 Fukushima nuclear disaster with the desire to help “accelerate the energy transition to a 100-per-cent renewable-powered planet.”
The deal could also see the Caisse invest another 50 billion yen in Shizen Energy projects. As part of the investment, the Caisse has obtained a seat on Shizen Energy’s board of directors.
While many of Canada’s big pension plans are pouring dollars into the Asia-Pacific region, much of the investment has come in the fastest-growing countries. Japan’s economy, stagnant for much of two decades, has seen little of that pension fund largesse.
Emmanuel Jaclot, the Caisse’s head of infrastructure, said in a statement that the transaction is an “important milestone” in the Caisse’s long-term Asia-Pacific infrastructure strategy.
“Japan has a crucial role to play in the decarbonation of Asia, and as an investor with deep experience in renewable energy, we are delighted to be working with the Shizen team to deliver on their ambitious plan for the energy transition,” he said.
In a statement, Shizen’s founders said the Caisse investment will allow it to accelerate its global development plans.
This is not Shizen’s first Canadian deal. In 2019, it partnered with TSX-listed Northland Power Inc. NPI-T in a 50-50 joint venture, Chiba Offshore Wind Inc. Tokyo Gas Co. Ltd. later joined the Japanese project, which is still under development.
AIMCo’s deal with Tidewater provides the company, which went public last year, with the money to pay off the balances on two lines of credit. A new credit line starts out at an interest rate of 6.5 per cent, and can rise to 8.5 per cent. AIMCo will also receive warrants to buy Tidewater shares, with an exercise price set 50 per cent above the stock’s current levels.
Tidewater’s plan is to turn a wide variety of renewable feedstocks (such as tallow, used cooking oil, distillers corn oil, soybean oil, and canola oil) into low-carbon fuels. In the past six months, it reported net income of $21.9-million on revenue of $37.0-million.
Ben Hawkins, the head of infrastructure, renewables and sustainable investing at AIMCo, said the investment “represents a rare opportunity for our clients to invest in renewable fuels.”