Fostering Industries with the Aim of Generating Business Opportunities
Mizuho adopts a medium– to long–term perspective in its initiatives based on group–wide collaboration to help foster the industries of the future.
Proactively contributing to creating a prosperous future by fostering growth industries.
As a financial institution based in Japan, Mizuho aims to contribute to the development of Japan's economy and society and strengthen the competitiveness of Japanese industries from a financial perspective. Active initiatives include "participation in establishing systems and frameworks through making policy recommendation and other activities," "providing support for structuring business models, business matching, industry and business reorganization and other assistance," and "supplying risk money and demonstrating risk–taking capabilities." Having positioned such areas as "environment and energy," "agriculture, forestry and fisheries," and "medical care and health" as growth industries, we are moving ahead with group–wide efforts to foster industries from the medium– to long–term perspective while also generating business opportunities.
Environment and Energy
In view of strong needs for promoting the use of renewable energy, energy conservation, and resolving environmental problems in both developed and emerging countries, Mizuho is leveraging its abundant expertise and know–how in those areas to offer support regarding global policies as well as business strategies.
- Forecast of Global Power Generation Investment (total figures for the 2014–2035 period)
(Source) Prepared by MHFG based on the International Energy Agency's World Energy Outlook 2014 (IEA WEO2014).
Arrangement of Ultralong–term Financing for Large–Scale Geothermal Power Generation Project
Owing to challenges regarding the cost, scale, siting, and other aspects of large–scale geothermal power generation projects, there has been no progress regarding such projects in Japan since 1996. Japan is considered to be the world's third richest country in geothermal resource volume, however, and in light of the 2012 introduction of a fixed–price power purchasing system for renewable energy and recent regulatory relaxation measures, there are rising expectations in Japan regarding geothermal power projects, which are superior to other kinds of renewable energy projects in terms of the cost and stability of the power they generate.
In January 2015, MHBK utilized a Japan Oil, Gas and Metals National Corporation (JOGMEC) liability guarantee scheme to arrange a total of JPY 26.2 billion of ultralong–term financing for a large–scale geothermal power generation project (Wasabisawa Geothermal Power Plant) in Yuzawa City, Akita Prefecture, that is being jointly invested in by Electric Power Development, Mitsubishi Materials, and Mitsubishi Gas Chemical. The plant is expected to have a power generation capacity of 42,000 kilowatt, and the project is the first such large–scale project requiring an environmental assessment for which JOGMEC has provided a liability guarantee.
Leveraging its experience and know–how regarding renewable energy project financing, MHBK provided its customers with a comprehensive range of services from the initial stage of considering the application of the JOGMEC liability guarantee system—including finance scheme design, risk analysis, the invitation of other financial institutions to participate in the financing scheme, contract negotiations, and post–financing paperwork—and has thereby made a large contribution to the project's realization.
Participation in Smart Community Demonstration Project in Slovenia
In accordance with EU directives that include reductions in the emission of greenhouse gases, Slovenia is working to expand its use of renewable energy sources and improve its energy efficiency, and those efforts require additional initiatives regarding the country's aging power distribution infrastructure and increasing demand for electric power.
- Integrated DMS and DR Solution
- *1BEMS: Building–Energy Management System
- *2FEMS: Factory–Energy Management System
- *3AEMS: Area–Energy Management System
The illustration shows a DR solution that will minimize peak demand and realize local production and consumption of energy (via micro–grids) by means of interacting a cloud–based integrated distribution management system (DMS: control system of distribution networks) that can be used by multiple electricity distribution companies with energy management systems (EMSs: systems that use IT for the management of electric power, gas and other forms of energy) installed by consumers.
In this regard, MHBK, Mizuho Information & Research Institute (MHIR), Hitachi and THE Power Grid Solution were selected to carry out a feasibility study for a "smart community demonstration project in Slovenia" of the New Energy and Industrial Technology Development Organization (NEDO), which is designed to build and demonstrate systems for the low–cost strengthening of Slovenia's power distribution network and stabilization of the country's power supply–demand situation.
The demonstration project aims to utilize advanced Japanese technologies in the fields of power distribution and information and communication technology (ICT) to ensure the stability of the distribution network, achieve efficient operations, establish demand response (DR) solutions to minimize peak demand, and realize local energy production and consumption of energy.
Leveraging the know–how it has accumulated in connection with eco–city projects, Mizuho conducted surveys and analyses of the electric power industry and related regulatory systems as well surveys of equipment suppliers, approached government officials, and implemented other measures required to build and evaluate the feasibility of a business model designed to benefit all Japanese and Slovenian parties involved in the project.
Medical Care and Health
As Japan is an advanced country regarding the challenges associated with the aging population and declining birthrate, measures to overcome the challenges through the progress of the medical care and health industry are a crucial means of enabling Japan's sustained growth. Based on its abundant industry expertise, Mizuho is promoting the establishment of medical care and health–related government policies and is building support systems for a wide range of customers.
- Japanese Average Life Expectancy and Healthy Life Expectancy by Gender (2013)
Investment in Regional Healthcare Industry Support Fund
Owing to the rapid progress of aging population and declining birthrate, Japan has a strong need to expeditiously devise means of restraining growth in its social security expenses, and fostering the growth of the industries related to the extending of healthy life expectancy has, therefore, become one of the country's top–priority tasks. Aiming to help overcome related challenges, the Regional Economy Vitalization Corporation of Japan (REVIC) and AGS Consulting cooperatively established the Regional Healthcare Industry Support Fund as a joint public–/private–sector fund in September 2014.
- Overview of the Regional Healthcare Industry Support Fund
By providing growth–stage healthcare providers and other entities with necessary risk money along with management personnel, the fund is aiming to help invigorate regional economies by developing and promoting the expanded use of new business models. As of April 2015, the fund had executed seven investments.
Approximately 20 regional financial institutions and other entities from throughout Japan have invested in the fund. In addition to its having undertaken the largest single investment in the fund, MHBK intends to take various initiatives to help foster and promote the healthcare industry's development in various regions going forward.
Participation in the Wellness Point Project
Aiming to help Japan realize a society with long healthy life expectancies, MHBK and MHIR are participating in the Wellness Point Project, a joint public–/private–sector demonstration project being implemented by participants, including relevant government ministries and agencies such as the Ministry of Internal Affairs and Communications and the Ministry of Education, Culture, Sports, Science and Technology, University of Tsukuba, and Tsukuba Wellness Research and other private–sector companies.
By employing ICT and an incentive system, the project is seeking to promote behavior changes in the approximately 70% of the population that is believed to be relatively uninterested in health issues. The project aims to provide individuals opportunities to proactively extend their healthy life expectancy by visualizing their health conditions along with rewarding "wellness points" that are exchangeable for gift certificates.
In its first fiscal year, the pilot project designed an efficacious incentive system and built a measurement and verification system for evaluating the effects on regional economic vitalization and reduction of medical care expense of pilot initiatives taken in cooperation with six partner cities . Plans call for continuing to analyze this pilot data going forward.
Mizuho is playing an important role in the project. MHIR is the project's representative company that oversees the whole project, while MHBK is considering related business models.
- *These include Urayasu City, Chiba Prefecture; Ohtawara City, Tochigi Prefecture; Okayama City, Okayama Prefecture; Takaishi City, Osaka; Date City, Fukushima Prefecture; and Mitsuke City, Niigata Prefecture.
The "Wellness Point" System
In light of the recognized health benefits of walking, individuals are rewarded wellness points when they join and continue participation in exercise classes sponsored by local governments and exercise programs by private sector. They are also rewarded wellness points in accordance with improvements in health conditions as effects of individuals' regular walking and other daily health promotion activities.
The six participating cities offer a total of more than 100 programs to facilitate participation by residents with low levels of health awareness. A system has been built to enable the conversion of wellness points into such forms as membership card system points, regional gift certificates, and social contributions (donations).
Agriculture, Forestry, and Fisheries
Believing that transforming Japan's agriculture, forestry, and fisheries industries into growth industries is a key means of overcoming issues associated with expanding domestic demand, creating domestic employment, and invigorating regional economies, Mizuho is leveraging its industry expertise and other capabilities as well as its nationwide base of customers to support the transformation of agriculture, forestry, and fisheries industries into growth industries.
- Agricultural and Fishery Products and Food Product Export Trends and the Government's Growth Target
Proactive Promotion of Sixth Industry Transformation
There have been increasing efforts to rebuild and revitalize Japan's agriculture, forestry, and fisheries industries in recent years by means of sixth industry transformation* initiatives.
The Agriculture, Forestry and Fisheries Fund Corporation for Innovation, Value–chain and Expansion Japan (A–FIVE), financial institutions, and local government entities provide funds to establish the Agriculture, Forestry, and Fisheries Sixth Industry Fund (hereinafter, "the Fund"). The Fund is established for each region and each theme.
Believing that the Fund is an effective means of transforming agriculture, forestry, and fisheries industries into growth industries, Mizuho has established the "Sixth Industry Initiative Support Desk" within MHBK across multiple related divisions to cooperate with regional financial institutions and A–FIVE by proactively participatingin the establishment of sub–funds.
- *Sixth Industry initiatives: This is a drive to promote stable growth and development of the agriculture, forestry, and fisheries industries and promote revival of the regions' economies by increasing added value in the agriculture, forestry, and fisheries industries through the integration of their production, processing, and logistical operations under a model in which their practitioners (primary sector entities) not only supply the raw materials, but also take a core, comprehensive role in the secondary sector (manufacturing and processing), and the tertiary sector (wholesale, retail, and tourism) businesses.
- Scheme of the Agriculture, Forestry, and Fisheries Sixth Industry Fund
In management of these sub–funds, MHBK is drawing on its broad customer base and knowledge of industries, collaborating with joint sub–fund investors, including regional financial institutions, local governments and their entities, and A–FIVE, to play the roles of supporting business matching at the global level for technology and sales channels. In addition, Mizuho Capital, which has abundant experience providing venture companies with capital and management support, is taking part in the management of some of the sub–funds. As of March 31, 2015, Mizuho had invested a total of JPY 1.7 billion in 13 sub–funds (total investments made by these 13 funds amounts to JPY 16.8 billion) and had made investments in nine business entities that will turn into a "Sixth Industry."
Establishment of the Gulf Japan Food Fund
Japan is seeking to create specific initiatives toward expanding the export of food–related products, as the government has stated a target of doubling foodstuff and agriculture, forestry, and fisheries product exports by 2020 under its "Japan is Back strategy." Improving food security is also a significant policy challenge in each Middle East nation. Accordingly, we believe that there is strong demand for both safe and high–quality food products as well as technology to support improving efficiency and adding value to food production and processing within the region.
With the objective of responding to these needs of Middle East nations and providing support on the financing side for the expansion of exports such as foodstuffs, agricultural, forestry, and fisheries products, and related products and technologies from Japan into the Middle East region, MHBK is preparing to establish the Gulf Japan Food Fund, a private equity fund that is scheduled to be established during autumn 2015.
- *Gulf Cooperation Council: Saudi Arabia, the United Arab Emirates, Oman, Kuwait, Qatar, and Bahrain
Establishment of this fund is an initiative based on the memorandum of understanding for business cooperation signed in August 2013 between MHBK and the Kuwait–based Gulf Investment Corporation (GIC), a government–owned investment corporation formed through equal investment by the six member states of the Cooperation Council for the Arab States of the Gulf. In addition to providing financial support through the fund, MHBK and the GIC will take mutual advantage of the broad networks that our two companies enjoy to find business par tners in both Japan and the Middle East and provide various support to the investment targets of the fund.