Japan-led project finance brings Australia’s infrastructure plans to life
With A$50 billion of public money committed to infrastructure projects up to 2020, Australia is a world leader in public-private partnerships and a secure destination for infrastructure investment. One company helping to bring in the finance to complete these projects is Japan-based global banking giant, MUFG, which is now one of Australia’s four biggest project finance lenders.
Image courtesy of MUFG
Contributing to Australia’s infrastructure developments
For its size, Australia is a world leader in infrastructure programs. State and federal governments have committed A$50 billion of public money to projects in the 2015–2020 time period. Priority projects include new inland rail routes, metropolitan public transport schemes, port expansions and underground motorway interconnectors. With an openness to multiple financing models – including public-private partnerships (PPPs) – opportunities for private finance and investment continue to grow.
Attracted by Australia’s low country risk, transparent legal system and robust regulatory oversight of financial markets, The Bank of Tokyo-Mitsubishi UFJ, Ltd., a member of Mitsubishi UFJ Financial Group (MUFG), is a core contributor to Australia’s ambitious infrastructure plans. With assets of A$3.3 trillion, MUFG is the second largest public company in Japan and the world’s fourth largest bank, as measured by total assets.
In Australia, MUFG has established a leading reputation for project finance. With assets of A$15 billion, MUFG is recognised as the fourth biggest project finance lender in Australia. MUFG has a 300-strong local headcount in the region.
Providing the capital for Australia’s infrastructure boom
With approximately 40 professionals in its project finance, advisory and lending business, MUFG is one of the principal international financiers and advisors in major Australian infrastructure projects. These include the Canberra Metro PPP as well as the Royal North Shore Hospital PPP, where MUFG’s advisory and lending teams played a significant role.
MUFG also participated in major infrastructure projects in the transportation sector (railroad, port and airport, and toll roads), social infrastructure (schools and hospitals), renewables (wind and solar) and the recent privatisation of the New South Wales transmission and distribution network.
Confidence in Australia’s growth prospects
For MUFG, Australia’s stand-out attractions are low country risk, a transparent legal system and a robust financial regulatory framework. Partly as a result, MUFG has a highly diversified corporate client loan book. Today, 70 per cent of MUFG clients are Australian corporates.
‘MUFG will continue to work closely with a range of Australian companies, especially on major infrastructure projects,’ says Masahiko Tanimura, Regional Head for Oceania, MUFG. ‘We have market-leading staff in corporate and investment banking, and infrastructure development, which enables MUFG to quickly establish win-win partnerships with Australian companies working on major projects.’
Australia and Japan have a shared banking history stretching back more than a century. Yokohama Specie Bank (the precursor organisation to Bank of Tokyo) opened its first branch office in Sydney in 1915, with Bank of Tokyo following in its footsteps in 1957. Bank of Tokyo was awarded a full Australian banking licence in 1985, and its successor, MUFG, has continued to expand ever since, opening offices in Melbourne in 2006 and Perth in 2012.
Major presence in Australia and around the world
MUFG has emerged as one of the world’s biggest financial groups via a series of mergers over the past two decades. In 1996, Bank of Tokyo merged with Mitsubishi Bank to create the Bank of Tokyo-Mitsubishi (BOTM) and its holding company, Mitsubishi Tokyo Financial Group (MTFG). MUFG was established when MTFG merged with UFJ Financial Group in 2006.
Today, MUFG has loan assets of ¥108 trillion (A$1.3 trillion, as at end of December 2016), making it the sixth largest bank in the world by asset size, and the second largest public company in Japan. MUFG employs 107,000 workers worldwide. Since 2008, MUFG has also maintained a 20 per cent stake in US investment bank, Morgan Stanley.
In 2011, Mitsubishi UFJ Trust and Banking Corporation, also a member of MUFG, and AMP Capital Holdings, a subsidiary of AMP, one of the largest independent financial services providers in Australia, entered into a strategic business and capital alliance, with MUFG acquiring a 15 per cent interest in AMP Capital Holdings.