HKMA seeks ‘One Belt, One Road’ partners

The $428bn fund is interested in clubbing together with other institutional investors to invest in infrastructure projects across the Belt and Road countries.

The Hong Kong Monetary Authority (HKMA), which manages the Island city’s $428 billion Exchange Fund, is looking to invest in infrastructure projects under the China-led “One Belt, One Road” policy through co-investing with other institutional investors, according to its chief executive Norman Chan.

HKMA, the city’s de facto central bank, plans to set up a mechanism to source deals through its “Infrastructure Financing Facilitation Office” initiative, followed by discussions with potential co-investors from the pool of partners which has joined the IFFO. 

The IFFO, supported by international infrastructure fund managers, institutional investors as well as other industry shareholders, is a platform launched by HKMA in July 2016 to facilitate infrastructure investments across the region. 

The Exchange Fund, the vehicle responsible for supporting the territory’s currency, may seek three to four co-investors who share same interest in the “One Belt, One Road” region to form consortium, Chan said, adding that he visited several Chinese state-owned companies in July for potential collaborations. 

President Xi Jinping proposed the “One Belt, One Road” initiative in 2013, with an aim to connect countries along the two ancient China-Europe silk roads through economic cooperation. The policy has now been supported by over 60 countries across Eurasia and facilitated a pipeline of projects in sectors like railway, expressway, power generation and sea port developments through bilingual partnerships between China and these countries. 

Chan added that the plan is in the preliminary stage, and thus no timelines or further details are currently available.
The Exchange Fund has been investing in alternatives, including private equity and overseas real estate, since 2009 through a “Long-Term Growth Portfolio”. Infrastructure Investor reported last November that the fund was considering making infrastructure investments, followed by reports saying it has made commitments to the asset class early this year.