AIIB eyeing $350m investment in Asia-focused funds

The Beijing-based multilateral is considering commitments to the IFC Emerging Asia Fund and India’s National Investment and Infrastructure Fund.

The Asian Infrastructure Investment Bank is considering two Asia-focused fund commitments, its second and third potential pledges after it backed an India-focused vehicle in June.

The proposed commitments include $150 million to the IFC Emerging Asia Fund, a $1 billion investment vehicle that supports projects in developing Asia, and $200 million to the National Investment and Infrastructure Fund, a sovereign investment scheme for Indian projects. 

The former is supported by the World Bank’s International Finance Corporation, which made an anchor investment of $200 million in the fund. Run by the IFC Asset Management Company, the vehicle has a 10-year life. It also received commitments from the Korea Development Bank and Fiji National Provident Fund for its first close, announced in August 2016. 

The IFC fund seeks to make equity and quasi-equity investments in companies and projects in the infrastructure, financial services, manufacturing, agribusiness and services sectors. The AIIB noted that it will only allow its investment to be deployed in the bank’s member countries. 

For the NIIF, the Indian government has been increasing efforts to attract additional capital from foreign institutional investors to the fund in a bid to accelerate infrastructure development in the country. The AIIB says the NIIF, which has a $6 billion overall target, will be raised in several tranches. The first totals $2.1 billion, to which the Indian government is committing $1 billion. About $900 million of the fund is expected to be contributed by other financial investors. 

“Sector-specific platform companies will be the primary investment vehicles of the fund,” noted the AIIB. “The fund will exclusively invest in India and intends to operate mostly through scalable platform companies that will target infrastructure assets primarily in roads, ports, airports, power, urban infrastructure and logistics.” It would be a 20-year investment, according to a document from the bank’s website. 

India’s Finance Ministry said last week that the NIIF is expected to achieve its first close soon, with offices being set up in Delhi and Mumbai. 

The two proposals will be sent for board approval in September and Q4 2017 respectively.