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GIC invests in Goldman Sachs-owned Japan Renewable Energy

Singaporean sovereign wealth fund enters Japanese infrastructure market, diversifies portfolio

SINGAPORE -- Singaporean sovereign wealth fund GIC has made its first investment into infrastructure assets in Japan, announcing Friday that it had bought stakes in the parent company of Japan Renewable Energy for an undisclosed sum. The deal is an extension of GIC's increasing interest in the renewable energy sector, as the fund diversifies its portfolio into this growth area.

The deal, worth less than 10 billion yen ($89 million) according to a source, saw GIC buying minority stakes of GS Renewable Holdings GK, the parent of Japan Renewable Energy, which owns and operates 34 clean energy power plants throughout Japan. The seller is MA Platform, the investment company of Akira Mori, chairman of real estate developer Mori Trust. Goldman Sachs continues to own majority stakes in GS Renewable Holdings GK.

Japan Renewable Energy-owned Mito New Town Mega Solar Park, Ibaraki, Japan

Founded in 2012, Japan Renewable Energy operates solar, wind and biomass power plants with total capacity of about 210 megawatts in various parts of Japan. New plants with 170 megawatt-capacity are under construction. The Japanese renewable power sector, which has an established feed-in tariff system, under which utility companies buy renewable power from government-accredited facilities at fixed rates for up to 20 years, is expected to provide a stable return to investors.

The announcement follows GIC's other deals in green energy infrastructure in Asia. In the Philippines, GIC, together with Macquarie Infrastructure and Real Assets, bought 31.7% of Energy Development Corporation, a geothermal power company, though a tender offer made in August. GIC also owns Indian renewable power player Greenko Energy Holdings, which is based in Hyderabad.

The acquisition in Japan is significant because the fund's investment in the country in recent years has been heavily focused on real estate. In September, GIC bought 51% of Sheraton Grande Tokyo Bay hotel for $460 million. GIC's investments in Japan, which represented 12% of the fund's total portfolio as of end-March, also include the ANA Intercontinental Tokyo hotel and the Pacific Century Place Marunouchi building in Tokyo.

GIC manages Singapore's foreign reserves. It officially says its total portfolio is worth "well over $100 billion", although experts estimate that it actually exceeds $300 billion. The fund announced in July that its 20-year annualized real rate of return decreased to 3.7% for the year ended March from the previous year's 4%.

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