HK Summit: GIP to focus on emerging markets ‘at full scale’

The fund manager will use its hands-on approach to expand into developing economies, vice-chairman Jim Yong Kim said.

Global Infrastructure Partners will increase its focus on emerging markets, the firm’s vice-chairman and partner Jim Yong Kim told attendees at Infrastructure Investor’s Hong Kong Summit on Wednesday.

“GIP has done so well in OECD markets that its focus on emerging markets has been small, but now we’ll take [investment in emerging markets] at full scale,” Kim, who stepped down as president of the World Bank in January to join the infrastructure fund manager, said during a keynote interview at the summit.

GIP’s hands-on approach to infrastructure, using its engineering expertise to improve assets, was the right strategy to enter emerging markets, he added.

According to Kim, investments in developing economies have been held back by misperceptions on the risk level of each market. “If you start with deep knowledge on the history of the country, and the regulatory regime of investable sectors, your risk perception changes dramatically,” he said.

At the same time, Kim stressed that most governments realise they need the private sector to develop their economies, and that, in exchange, they have to allow private players to capture returns. “There is an understanding that if you allow investors to create value, it will be good for your country,” Kim said.

He used as an example the renovation of Jordan’s Queen Alia international airport, built and operated by Airport International Group, a consortium partly owned by France’s ADP Group. “Rather than paying a huge debt service, [Jordan] has added $1 billion to their treasury, and has one of the best airports in the Middle East,” he said. “We believe that these opportunities can be created everywhere.”

Asked which sectors will offer more opportunities in the future, Kim focused on energy, transport, telecommunications and the wastewater sector. “These are things that are critical and will always be needed; and, except for telecoms, have been part of GIP’s strategy since the beginning,” he said.