Equity Participations

Equity participations are capital contributions to companies where Japanese companies have equity stakes to undertake overseas projects, as well as funds where Japanese companies perform significant roles. In principle, equity participations take the following forms.

Advantages of Using Equity Participations

  • JBIC supports overseas investment projects undertaken by Japanese firms by drawing on its knowledge and knowhow on host country economies and their investment projects.
  • The political risk of the host countries will be mitigated by leveraging JBIC's long-cultivated ties with their governments and its position as an official financing institution. JBIC will support overseas projects by drawing on the knowledge it has acquired on host country economies and investment projects.
  • The investing firms can turn to JBIC for making assessment of environmental and social considerations pertaining to their investment projects.

Utilizing Equity Participations

JBIC can make equity investments in the following cases.

Types of Projects

Japanese companies make equity participations in an overseas project

Japanese companies acquire equity interests in a foreign company to form business alliance

Japanese companies participate in fund (and perform such major role as general partner in their management and investment decisions)

Japanese companies form a consortium and participate in an international fund

Note: JBIC may also make equity investment in the following cases where Japanese firms do not have equity stakes.

  • Capital contribution to multilateral institutions and international funds when the projects to be undertaken by them will have concrete positive effects on the overseas business development of Japanese firms.
  • Exerting a favorable impact on the preservation of global environment.
  • Responding to disruption in general international financing activities.

Country Eligibility

While investments have to be made, in principle, in developing countries, projects in developed countries are also eligible in the following cases:

  • Projects contributing to the overseas development and acquisition of resources that are strategically important for Japan
  • Projects contributing to the maintenance and improvement of the international competitiveness of Japanese industries and associated with the following areas:
    • Nuclear power generation
    • High-speed railway linking major cities
    • Railway in major cities
    • Water supply, sewage system and other types of wastewater treatment facilities, as well as industrial water supply
    • Power generation by harnessing renewable energy sources
    • Power transformation, transmission and distribution
    • Coal-fired power generation
    • Manufacturing of fuel products derived from coal gas
    • Large-scale carbon dioxide capture and storage
    • Efficient use of electricity or heat by using information and telecommunication technology
    • Development of the Internet and other advanced telecommunications network

Percentage in Total Investment

In principle, 50 percent or less of the total investment and on the condition that JBIC will not become the largest shareholder among Japanese investors.

Others

  • In principle, the exit conditions should be set forth prior to making decision on equity participations.
  • JBIC will basically limit its involvement in daily business operations and management to the minimum.
  • JBIC may provide both equity and loans for the same project. (In that case, JBIC will only invest in preferred shares.)