Mercuria and Daiwa Break New Ground with Japan’s First Open-Ended Aircraft Fund Targeting ¥150 Billion
In a significant evolution for Japan’s alternative investment sector, Tokyo-based Mercuria Investment (MIC) has unveiled plans to launch the country’s first open-ended aircraft fund managed by a domestic firm. The initiative, dubbed "MACH OE," represents a strategic shift in how Japanese institutional capital accesses the global aviation market, moving beyond traditional tax-lease structures toward liquidity-focused asset management.
The fund targets an asset size of over JPY 150 billion ($1 billion) and has secured the Development Bank of Japan (DBJ) as a prestigious anchor investor, signaling strong institutional confidence in the venture.
While the fund is a joint establishment with Irish asset manager Airborne Capital Limited (ACL), the structure is heavily supported by Japanese financial heavyweights. Daiwa Securities Group, through its subsidiary Daiwa JPI Alternative Investments (DKAI), has entered a strategic business alliance with the general partners. Daiwa will play a critical role in distribution, introducing the product to its vast network of domestic investors and providing operational support.
A New Frontier for Japanese Capital
Historically, the Japanese aircraft investment market has been dominated by Japanese Operating Leases (JOL/JOLCO), which are typically closed-ended and utilized primarily for tax deferral benefits. MACH OE differentiates itself by offering an open-ended structure, providing investors with periodic entry and exit points—a rarity in a sector known for locking up capital for years.
Toshihiro Toyoshima, President of Mercuria Investment, emphasized that while Japan is familiar with depreciation-focused aircraft deals, this fund focuses on income generation backed by real economic demand.
"By structuring our aircraft investment funds as open-ended vehicles, we believe we can respond more flexibly to evolving investor needs," Toyoshima stated.
Timing the Market
The launch comes as the aviation industry sees a full recovery in passenger demand following the COVID-19 pandemic, coupled with severe supply constraints from manufacturers. This imbalance has created a favorable environment for aircraft lessors, driving up lease rates and asset values.
The consortium aims to capitalize on this by courting Japanese pension funds, financial institutions, and educational endowments seeking yield and inflation protection.
The "All-Japan" Institutional Push
The involvement of the Daiwa Securities Group marks a deepening of the brokerage giant's commitment to alternative assets.
"We have further strengthened our efforts... to provide new investment opportunities in response to growing demand for alternative investments," said Atsushi Katayama, President of Daiwa JPI Alternative Investments.
With the Development Bank of Japan anchoring the fund and Daiwa facilitating the capital flow, MACH OE represents a concerted effort by Japan’s financial establishment to institutionalize aircraft leasing as a core asset class for domestic portfolios.
Norbert Gehrke
