Sumitomo Mitsui Financial Group and enechain Announce New Joint Venture

TOKYO, November 7, 2024 —  Sumitomo Mitsui Financial Group, Inc. and enechain Corporation, a company that offers the largest wholesale energy trading marketplace in Japan, today announced the establishment of a new joint venture company, eXstend.

eXstend’s mission and origin of its name
eXstend's mission is to provide Japanese utilities with opportunities to hedge against fuel price volatility risks, supporting their stable business operations. The name "eXstend" represents the collaboration (the letter “X”) between enechain (the letter “e”) and SMBC Group (the letter “s”), aiming to extend trading opportunities for market participants.

Background
While the Japanese government aims to achieve a 36-38% renewable energy ratio by 2030 through various initiatives, fossil fuels currently account for over 70% of Japan's power supply, with heavy reliance  on imports. Under these circumstances, many Japanese utilities (hereafter referred to as "hedgers"[1]) are exposed to fuel price volatility, making risk hedging crucial for their stable business operations.

Although enechain has been providing fuel price hedging opportunities through its broking functions, only a limited number of hedgers could utilize these opportunities due to operational burdens in international fuel market trading and capital requirements. To address these challenges, SMBC Group and enechain jointly established this new joint venture.

What eXstend will do
eXstend will provide hedgers with market access to manage fuel price volatility risks and opportunities to trade with new counterparties. Rather than taking positions and fuel price risks itself, eXstend's role is to facilitate smooth transactions between hedgers and optimal counterparties in enechain's market. This structure enables hedgers to hedge fuel price risks more efficiently and effectively while providing traders and fuel producers with new trading opportunities.

SMBC Group's Role
Under its mid-term management plan "Plan for Fulfilled Growth," SMBC Group has positioned the creation of social values as a core policy and is actively working toward making our society sustainable. The Group has identified power-related issues as a key focus area and has established a dedicated team to address them. Through this initiative, SMBC Group will contribute to providing solutions for fuel price volatility risks, which have been a significant challenge for Japan's power industry.

enechain's Role
With its mission of "Building Energy Markets, Coloring Our Society," enechain provides trading opportunities for wholesale electricity, fuel, and environmental certificates. Through eXstend's capabilities, enechain will enhance its existing fuel trading broking functions to offer new hedging opportunities to a broader range of businesses.

Future Prospects
eXstend will provide solutions to minimize fuel price volatility risks faced by Japanese utilities, supporting their stable operations in an increasingly complex energy market. The company aims to create new values in both domestic and international energy markets.

Company Overview

About enechain

enechain is a startup running the largest energy forward marketplace in Japan, with a GMV of 1 trillion JPY in 2023. From electricity and fuels to environmental values, our goal is to achieve “Social Good” by creating fair markets where anyone can trade any type of energy.

In addition to our marketplace business, enechain offers a range of integrated tools to support energy trading, including clearing facility, data platform, and risk management software tailored to market participants' needs, providing comprehensive support to energy companies.

Our investors include DCM Ventures, Soros Capital Management, JP Investment[2], and nine major Japanese energy companies such as JERA, K4 Ventures (owned by Kansai Electric Power), Chubu Electric Power Miraiz, Tokyo Gas, and Osaka Gas, along with venture capital subsidiaries of all Japan's mega banks.

For more information, please visit enechain.co.jp.

[1] In this document, "hedgers" refers to businesses seeking to hedge against fuel price volatility.

[2] JPS Growth Investment Limited Partnership co-managed by a subsidiary of JP Investment Co., Ltd. and Sumitomo Mitsui Trust Investment Co.