The Asian Infrastructure Investment Bank has published a medium-term strategy outlining its approach to mobilising private sector investing in emerging market infrastructure.
Between now and 2020, the bank will work towards actively developing its private sector pipeline as opposed to relying on referrals from other lenders. According to its Strategy on Mobilising Private Capital for Infrastructure, the bank will also structure and execute standalone deals with a view to creating viable models that can attract private sector capital.
AIIB expects to build a “strong team of specialists” to form partnerships with financiers, including other multilateral development banks, commercial banks, institutional investors, and advisors, while developing its origination capacity.
The bank will expand the team of specialists based on its business needs at the right time, an AIIB spokesman told Infrastructure Investor.
He added that the bank has been receiving investment proposals from various parties and studying innovative, viable models that will channel private sector capital to AIIB-backed projects, but declined to provide further details.
“We need institutional investors and private sector funders to come to the table and partner with us if we are going to fill the current infrastructure gap in Asia,” AIIB’s vice-president for policy and strategy, Joachim von Amsberg, said.
AIIB will prioritise transactions that have a strong likelihood of generating repeat mandates and provide business development opportunities; employ structures that can be replicated; provide an opportunity for the bank to play a lead role in financing and to use multiple products, including debt, equity and derivatives.
The bank has allocated $2 billion – 10 percent of its paid-in capital for the first five years of operations – to equity investments, the bank’s chief investment officer DJ Pandian told Infrastructure Investor in a recent interview.
“Our main mandate is to enhance regional connectivity, to bridge the [Asian] infrastructure gap,” Pandian said, referring to the $26 trillion in investment the Asian Development Bank estimates is needed through 2030 to plug the gap.
From 2021 onwards, AIIB will work on opening up new markets and creating dealflow, aiming to become the ‘go-to’ institution for infrastructure financing solutions in the region.