12 minYour Investment Soundtrack: The Companies Behind BL Equities Japan – Part 2
Continuing our portfolio soundtrack journey, tracks three and four explore two massive, interconnected investment themes reshaping the global economy: infrastructure investments and the global energy shift.
These themes reinforce each other powerfully—as societies rebuild aging systems, they can make them cleaner and more efficient from the ground up, while also meeting surging new demand from data centres powering our digital economy. Your portfolio companies are positioned to capitalize on both these unstoppable global forces.
Another Brick in the Wall
Infrastructure Investment: Building for the Future
When Pink Floyd released "Another Brick in the Wall" in 1979, they questioned institutional structures. Today, we face the challenge of building literal structures—as aging infrastructure demands renewed investment. This new wave of infrastructure spending is driven not only by maintenance needs but also by shifting economic patterns, as regionalization gradually replaces aspects of globalization and companies pursue reshoring strategies. Each new facility, transport link, and production plant forms another essential brick in the foundation of economic resilience and future growth. The companies building these essential bricks span the entire infrastructure value chain.
Komatsu builds the massive machines that shape our world—the excavators digging foundations, bulldozers clearing land, and dump trucks hauling materials on construction sites everywhere. As the world's second-largest maker of heavy equipment (behind Caterpillar), they're particularly strong in mining, which accounts for nearly half their business. What gives them an edge is their dominant position in Asia, where rapid urbanization and infrastructure development create endless demand for the big yellow machines that turn empty land into cities and extract the raw materials that fuel modern life.
Shin-Etsu Chemical is Japan's chemical giant that touches your life in ways you'd never expect. They're the global leader in making silicon wafers—the foundation of every computer chip—plus they're the world's largest producer of PVC, one of the most versatile plastics ever invented. The pipes in your walls, the siding on houses, your car's dashboard, and even your credit cards all likely contain their specially formulated PVC. What makes them powerful is their approach: instead of buying materials from others, they control the entire process from raw chemicals to finished products. This vertical integration gives them better quality control and cost advantages in high-margin specialty markets where they often dominate with little competition.
Makita is one of the big global power tool makers, competing with household names like Black & Decker and Bosch. What sets them apart is their reputation among professionals—contractors and tradespeople who need tools that work reliably day after day. Their smart strategy involves creating an ecosystem where the same battery works across their different tools, so once you buy into Makita, switching brands becomes expensive and inconvenient. They're positioned to benefit from major trends: rising infrastructure spending globally, growing construction activity, and an emerging middle class in developing countries discovering the convenience of power tools for home improvement.
💡 Did you know that Makita's rechargeable battery powered products include a coffee machine, a wheel barrow, a radio, a USB charger, a helmet fan and a foldable bike?
Ebara makes the industrial workhorses that keep modern life flowing—literally. They manufacture the pumps that move oil and gas, the compressors that power industrial processes, and the systems that treat our waste and water. Additionally, they produce vacuum pumps, valves, and other components essential for semiconductor manufacturing. What makes them particularly attractive is their service-heavy business model: while selling the initial equipment gets them in the door, the real money comes from maintenance and parts over the equipment's 20–30-year lifespan. In their environmental plants business, a staggering 80% of revenue comes from ongoing service contracts rather than new sales. It's like being the only mechanic in town for highly specialized, mission-critical equipment that absolutely cannot break down.
Itochu is one of Japan's giant trading houses—companies that invest in, trade, and develop businesses across entire supply chains, from textiles to energy to metals. In a resource-scarce country like Japan, Itochu essentially functions as one of the nation's global procurement departments, turning relationships into the reliable flow of materials that keeps entire industries running. When infrastructure is built, Itochu helps source materials and coordinate logistics, but they're equally involved when your clothes get made, cars get assembled, or energy projects get developed. With over 1,000 companies in their network, they're the master connector that could fit into almost any investment theme—infrastructure is just one piece of their vast global puzzle.
Kajima stands among Japan's largest construction and civil engineering companies, building everything from skyscrapers and bridges to complex industrial facilities. With decades of expertise, they've earned a rock-solid reputation for delivering challenging projects flawlessly. Their sweet spot? High-tech industrial facilities that require precision engineering. When semiconductor giant TSMC needed a cutting-edge chip manufacturing plant in Kumamoto, they trusted Kajima to get it right. This expertise couldn't be better timed. With global tensions driving companies to relocate production closer to home, industrial capex spending is surging. Every reshored factory, every new tech facility, every strategic infrastructure project creates opportunities for Kajima's specialized construction expertise in an increasingly fragmented world.
💡 Did you know that Kajima pioneered earthquake-resistant "base isolation" technology that lets buildings float on special bearings during earthquakes?
Air Water is one of the invisible forces that keeps Japan's industrial backbone running. Every factory, hospital, laboratory, refinery, steel mill or semiconductor fab needs industrial gases like oxygen, hydrogen and nitrogen to operate—and Air Water is one of the few companies that can reliably supply them at massive scale. In Japan's tight-knit oligopoly, they've locked in long-term contracts that make their revenue incredibly stable. Think of them as Japan's version of Air Liquide, but with a different strategy—they've diversified heavily beyond gases into healthcare, energy, and agriculture through strategic acquisitions. Essentially, if Japan's building or expanding anything industrial, Air Water is likely supplying something essential to make it happen.
It's the End of the World as We Know It
Empowering the Future: Electrification, Energy Efficiency and Clean Energy
When R.E.M. declared in 1987, “It’s the End of the World as We Know It (And I Feel Fine)”, they captured the uneasy mix of disruption and optimism that comes with profound change. Today’s energy transformation feels much the same: the old order of fossil fuels and inefficient systems is giving way to electrification, clean power, and smarter technologies. For the companies driving it, this is less an ending than a beginning—an opportunity to innovate, compete, and build a more sustainable economy.
JGC Holdings sits perfectly at the crossroads of both investment themes—energy transition and infrastructure rebuild. This global engineering powerhouse specializes in planning and developing plants for transforming natural gas into liquefied natural gas (LNG), having built over 30% of the world's LNG production capacity with a reputation for flawless execution on massive, complex projects. Their timing is perfect: Europe's scramble to replace Russian gas, the global push toward cleaner energy, and years of underinvestment in energy infrastructure are driving surging demand for new LNG plants. JGC's expertise extends beyond LNG to green hydrogen and renewable energy facilities—exactly where future investment is heading. With a solid project backlog providing multi-year visibility, they're positioned at the heart of the global energy transformation.
Daikin develops air conditioning and heating systems that help make buildings more energy-efficient and climate-friendly. As the world's top air conditioning manufacturer, they're not just keeping buildings comfortable—they're revolutionizing how we heat and cool spaces efficiently. Their heat pumps, which are essentially sold on the European market, can heat your home using a fraction of the energy of traditional systems by extracting warmth from outside air, even in freezing temperatures. With manufacturing in over 100 locations and business in 160+ countries, they're positioned to benefit from two massive trends: emerging markets discovering air conditioning as middle classes grow, and developed countries switching to energy-efficient systems to meet climate goals. Every Daikin unit with an inverter saves energy compared to older technology, making comfort and decarbonization reasonably compatible.
Bridgestone battles France’s Michelin for the title of the world’s largest tire manufacturer. The company, which also owns the Firestone brand, is increasingly focusing on specialty tires for electric vehicles — low-rolling-resistance models that extend battery range and improve energy efficiency. Beyond the product itself, it is developing digital platforms with tire sensors and predictive maintenance to help fleet operators optimize performance and reduce energy use. While new car sales fluctuate with economic cycles, tire replacement provides steadier, higher-margin revenue — making the business more defensive than it seems. Bridgestone’s edge lies in its massive scale, full vertical integration from rubber plantations to finished products, and a strong local manufacturing base that shields it from Trump-era tariffs and helps keep profitability stable across cycles.
💡 Did you know that the company making the most tires in the world isn’t Bridgestone or Michelin? It’s Lego—churning out more little rubber rings than the two tire giants combined!
Hitachi has pulled off one of the most impressive corporate transformations in modern business. Once known for making heavy machinery, they've evolved into a digital infrastructure powerhouse that combines old-school engineering expertise with cutting-edge IT solutions. Today, they're the company building the smart systems that power modern life—from the railway systems that move millions of people daily to the power grids that distribute electricity efficiently across continents. Their timing couldn't be better: aging infrastructure in developed countries needs upgrading, while emerging markets are building new systems from scratch. With major subsidiaries in power transmission, automotive components, and EV systems, Hitachi is positioned at the intersection of two massive trends—digitalization and the green energy transition.
💡 Did you know that Hitachi plays a key role in producing Japan's famous Shinkansen bullet trains, including the advanced N700S models that travel over 515 km between Tokyo and Osaka in just over two hours?
Murata Manufacturing makes the tiny electronic “organs” that keep modern devices alive, and almost half of the world’s multilayer ceramic capacitors (MLCC) come from their factories. These microscopic but critical parts store energy, regulate electric flow, and quietly enable virtually every electronic device. Murata’s edge is their ability to make components ever smaller and more efficient, keeping them essential as technology demands more power and electric efficiency in less space. As devices get smarter and cars go electric, Murata is the hidden giant ensuring our connected world keeps running smoothly and every step toward electrification creates more demand for their precision components.
💡 Did you know that a high-end smartphone contains around 1,000 MLCCs, while a single electric car can use over 30,000?
Sumitomo Electric Industries makes the wiring and cables that keep the world connected and moving. From the wiring harnesses that connect every electronic system in your car to the optical fibre cables carrying the world’s data, their products sit at the centre of some of the biggest shifts in technology. As vehicles transform from mechanical machines into computers on wheels, the amount of sophisticated wiring required multiplies dramatically. Beyond automotive, 5G networks and high-speed internet keep pushing the limits of optical fibre. And as the energy transition accelerates, Sumitomo’s power transmission cables are playing a quiet but crucial role in expanding renewable energy and modernizing grids.
Renesas Electronics makes the specialized chips that serve as the brains behind our increasingly electric world. While other semiconductor companies chase computing power, Renesas focuses on the unglamorous but critical job of managing power efficiently—their microcontrollers and power management chips control everything from driver assistance systems in cars to industrial automation equipment. What makes them valuable is their reputation for ultra-reliable chips that meet the stringent safety standards required in automotive and industrial applications, built through decades of specialized expertise. As factories, electric vehicles, and data centres become increasingly power-conscious, demand grows for Renesas's high-grade power management solutions that squeeze maximum efficiency from every electron.
The Complete Setlist
We have seen that from construction equipment to energy efficient solutions, your Japanese companies leverage their engineering expertise and strong market position to benefit from essential trends. In the next part of this series, we will shift to the theme of digitalization and the companies transforming how information flows, businesses operate, and societies connect in our increasingly digital world.
Volume 1: Demographic Shift: Healthcare Innovation and Automation – available
Volume 2: Infrastructure Spending and the Energy Transition – available
Volume 3: The Digital Revolution – available
Volume 4: Evolving Consumer Trends - available on 27 November
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Written by Steve Glod, Fund Manager
BLI - Banque de Luxembourg Investments, an asset management company approved by the Luxembourg Financial Sector Supervisory Commission (CSSF)
Final date of writing: 12 November 2025.
Publication date: 13 November 2025
The companies mentioned in this article are all held in the BL Equities Japan Fund managed by the author at the time of writing. As the Fund is actively managed, its composition is subject to change over time; the companies mentioned in this article may leave the portfolio depending on subsequent investment decisions made by the manager.
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