The Potential for a Hokkaido PEIT in Light of Japan's New Growth Strategy

From Prime Minister Takaichi’s Policy Speech to the Role of Long-Term Investors and Policy-Based Finance

In her October 5, 2026, policy speech to the National Diet, Prime Minister Sanae Takaichi outlined a strategy to stimulate domestic investment through large-scale, long-term, and predictable government spending. The strategy rests on two pillars: the Japan Growth Strategy and the Regional Future Strategy. It includes a five-year framework for supporting regional industrial clusters and a plan to publish a Domestic Investment Map by spring 2027, identifying projects expected to materialize across Japan with national government support.

For Hokkaido, this policy direction raises an important question: how can new projects in renewable energy, battery storage, data centers, and semiconductor-related industries become assets that long-term investors can acquire and hold on economically rational terms?

This question is closely related to the regional PEIT concept that we at JAMP have been exploring and discussing with stakeholders in Hokkaido and other regions of Japan. The objective is not simply to establish another investment vehicle, but to examine whether such a structure could help connect regional investment opportunities with long-term capital on economically sustainable terms.

From Government-Supported Projects to Investable Assets

Hokkaido may see expanding investment opportunities across renewable energy, battery storage facilities, data centers, semiconductor-related industries, and other sectors. But a project that is important from a public policy perspective is not necessarily an asset that investors can acquire at an appropriate price.

Consider battery storage facilities. Their financial performance depends not only on grid connection arrangements and construction costs during development, but also on electricity market prices and equipment degradation after operations begin. For data center-related facilities, investment value can vary substantially depending on long-term use agreements, counterparty creditworthiness, and the cost of equipment replacement. Similarly, the development of a semiconductor industry cluster does not mean that every related business will be suitable for long-term investment.

The planned Domestic Investment Map could be a valuable starting point for identifying opportunities emerging across Japan's regions. Investors, however, must assess more than a project's location or policy significance. Their decisions depend on prospective cash flows, residual risks, the legal and economic rights being acquired, and the acquisition price.

Government policy can create opportunities for investment, but it does not automatically create investable assets. Bridging that gap requires financial intermediation capable of transforming projects into assets that meet investors' requirements.

What Could a Hokkaido PEIT Add to Existing Financing Structures?

Hokkaido already has financing initiatives aimed at supporting regional investment. One example is the SPARX Sapporo-Hokkaido GX Fund, which began operations in March 2026 and targets projects in renewable energy, battery storage, hydrogen, data centers, and other green transformation (GX) activities within Hokkaido.

Any discussion of a Hokkaido PEIT should therefore begin with a fundamental question: what could it accomplish that existing GX funds, bank lending, project finance, and other investment structures cannot adequately provide?

Capital willing to assume development-stage risks may have different return expectations and investment horizons from capital seeking long-term cash flows from operating assets. If an investment held by the former can be transferred to the latter following independent assessment and at an appropriate price, the initial investor may be able to recover capital and reinvest it in subsequent projects.

This does not imply that assets held by existing GX funds would necessarily be transferred to a PEIT. Some investments may be more appropriately retained by their original owners.

Where the objective is simply to finance an individual project, other structures may be more appropriate. These include Godo Kaisha–Tokumei Kumiai (GK-TK) arrangements, investment limited partnerships (LPS), bank lending, and project finance. The ability to sell assets and reinvest the proceeds is not unique to a PEIT.

The potential value of a regional PEIT lies in its ability to bring multiple eligible investments together under a common governance and investment management framework, while potentially broadening access to long-term capital over time.

A regional PEIT could instead provide a framework for continuously evaluating, acquiring, and managing eligible investments, while connecting regional investment opportunities with a broader base of long-term investors.As the portfolio develops, its investor base might expand from initial investors, potentially including policy-based financial institutions and regional financial institutions, to long-term institutional investors such as insurance companies and, if the necessary conditions are met, investors in the capital markets.

The additional value would not simply be asset recycling. It would be the possibility of connecting repeated project-level financing to an enduring regional portfolio and, potentially, the broader capital markets.

GK-TK and LPS structures can be effective vehicles for individual investments or defined investment strategies over a specified period. A regional PEIT, by contrast, could be designed as a permanent capital hub—a place where successive investment opportunities in the region can be evaluated, accumulated, and financed over time.

However, establishing a PEIT does not automatically attract assets or investors, nor does it guarantee access to public markets.

The Tokyo Stock Exchange's existing Venture Funds Market has specific listing requirements covering matters such as the proportion of investments in unlisted shares and related assets, the number of investors and listed investment units, investment concentration limits, valuation arrangements, and governance. These requirements illustrate why a prospective regional PEIT cannot assume that listing will be available merely because its investment objectives are aligned with public policy.

I have personally considered the possibility of connecting a Hokkaido PEIT to a market such as the Sapporo Securities Exchange in the future. This remains my own idea, not an established listing route. Realizing it would require the Sapporo Securities Exchange, relevant regulatory authorities, and other stakeholders to examine institutional arrangements, investor demand, continuous price formation, and other issues. It would be far from straightforward.

More importantly, an exchange listing should be treated as an option, not the objective itself. Any regional PEIT would first need an economically viable investment proposition and a sound operating framework while remaining unlisted.

Could Policy-Based Finance Help Establish an Initial Investor Base?

This brings us to the potential role of policy-based finance.

In March 2026, the Development Bank of Japan (DBJ) entered into an investment agreement with the SPARX Sapporo-Hokkaido GX Fund, using its Special Investment Operations framework. The Japan Green Investment Corp. for Carbon Neutrality (JICN) also decided to invest in the fund. Separately, DBJ has invested in Tokyo Metro Private REIT Investment Corporation.

These examples demonstrate that policy-based financial institutions can participate in establishing privately managed investment vehicles. They do not, however, establish that an investment in a regional PEIT would necessarily qualify for similar support.

Such a decision would require an assessment of the specific investment's eligibility and expected financial returns. It would also require consideration of why private capital alone might not provide sufficient funding, how much additional private investment policy participation could mobilize, and how the public investor would ultimately recover its capital.

Subject to those conditions, I believe there is value in examining whether policy-based finance could participate in establishing the initial investor base of a new regional PEIT.

A new investment vehicle has no operating track record, which may discourage private investors from participating at an early stage. If policy-based financial institutions participate following independent due diligence and on economically justified terms, their investment could provide time for the vehicle to acquire assets and build an operating history. This, in turn, could generate information that later private investors can evaluate independently.

DBJ's Special Investment Operations framework was established to encourage the supply of growth capital by private investors, using, in part, government investment through Japan's Fiscal Investment and Loan Program framework. According to DBJ, as of March 31, 2026, it had approved a cumulative ¥1.5627 trillion in investments and loans under the program, associated with ¥10.8102 trillion in mobilized private-sector investments and loans. DBJ also reported cumulative profitability for the program.

JICN's investment criteria likewise reflect financial discipline. They generally require private-sector investors and other eligible parties to contribute at least an amount equivalent to JICN's equity investment, subject to specified exceptions. Profitability and the prospect of future capital recovery are also part of its investment assessment.

My argument is therefore not that policy-based financial institutions should absorb initial losses to make a regional PEIT possible. These institutions must also meet return and capital recovery requirements, and their participation would not guarantee the investment value of a PEIT.

Rather, policy-based finance could potentially contribute to the formation of an initial investor base, allowing the vehicle to build an investment and operating track record that subsequent private investors could assess independently. The capital relay could therefore extend beyond the underlying projects to the investor base itself, as a vehicle builds the track record and investment characteristics needed to attract a broader range of private investors over time.

Making the Capital Relay Economically Viable for Every Participant

The final challenge is whether the economics work for every participant.

Regional financial institutions need opportunities to earn appropriate returns for originating projects and producing investment-relevant information. Asset management companies must conduct independent due diligence and valuation, and must be prepared to reject acquisitions when the price is not justified. Project sponsors need an economically rational basis for selling assets, recovering invested capital, and directing that capital toward new developments.

Long-term investors, meanwhile, must be offered sufficient risk-adjusted returns after considering acquisition prices, operating costs, and the risks of geographic concentration. Supporting Hokkaido's development cannot, by itself, justify an investment decision.

There is no guarantee that the sale price sought by an initial investor will match the price a long-term investor is willing to pay. Independent valuation and effective management of conflicts of interest become particularly important when projects involve parties with close relationships to regional financial institutions or existing funds.

An investment corporation also incurs fixed costs for valuation, audits, administration, governance, and other functions. Without sufficient assets under management, the vehicle itself may not be economically sustainable even if individual investments are profitable.

For these reasons, I do not believe the starting point should be to establish a PEIT immediately. Instead, we should begin by examining specific candidate projects that might qualify as investments and testing the economics of a possible capital relay.

That examination should address several questions: Who assumes each risk, and what developments could reduce it? Who would acquire the asset, at what price, and under what conditions? How would each participant earn revenue from its role? What risk-adjusted returns could investors in the regional PEIT reasonably expect?

If this analysis shows that an LPS, GK-TK arrangement, or another structure would be more appropriate, that structure should be selected instead. A PEIT should be considered only where its additional functions justify its costs and complexity.

From Regional Growth Policy to Sustainable Capital Circulation

Prime Minister Takaichi's policy speech set out a direction for generating new projects across Japan's regions. What must follow is a financial and market framework capable of transforming those opportunities into investable assets and transferring them between investors with different risk appetites and investment horizons.

The central question is who will take responsibility for converting policy-driven business opportunities into a sustainable cycle of capital, and how each participant can do so on economically viable terms.

With the government's growth investment direction now clearer, I believe it is time to move the discussion of a potential Hokkaido PEIT from conceptual possibilities to practical examination. The starting point should not be the creation of a new vehicle, but actual candidate investments through which we can test whether the proposed capital relay can work economically for all parties involved.

Author: Keiichi Ohara, President & CEO, JAMP Corporation
About This Article
This article is an adapted English edition of JAMP Perspective No. 354, originally written in Japanese by Keiichi Ohara and distributed on October 14. It has been edited and supplemented where necessary to make the discussion and its Japan-specific context clearer to readers outside Japan. It is therefore not a direct translation of the original Japanese newsletter.

This article is provided for informational purposes only and does not constitute investment advice or a recommendation regarding any financial product.