Airports' sale could raise up to 1.2tr yen

New Kansai International Airport is seeking to attract Japan's state-run retirement fund to a sale of two airport concessions that could raise as much as 1.2 trillion yen (HK$90.25 billion).

The Government Pension Investment Fund (GPIF), the world's largest pension fund with US$1.2 trillion under management, "is a strong future candidate investor for infrastructure including these airports", said Shinichiro Okada, who is overseeing the concession sale for New Kansai. He declined to comment on whether the parties are in talks.

"Airport concessions will be a new asset class that would attract pension funds in Japan," said Okada, who formerly worked at Macquarie Group's infrastructure business in Japan.

State-owned New Kansai plans an auction next year of operation rights to two airports in Osaka prefecture in western Japan, part of a push by Prime Minister Shinzo Abe to cut public debt and boost private investment. GPIF plans to start investing in infrastructure as it seeks to increase returns, said people with knowledge of the matter. A spokesman for GPIF declined to comment.

Ontario Teachers' Pension Plan, Canada's third-biggest retirement-fund manager, posted a 13 per cent return on investment last year. Real assets such as property, infrastructure and timberland returned 15 per cent, while fixed-income investments returned 5.1 per cent, according to a statement in April.

"Infrastructure is a middle-risk and middle-return investment vehicle that typically yields annual return of more than 10 per cent," Okada said. "Globally, pension funds typically allocate a certain portion of their money pool to infrastructure."