Hong Kong’s infra body in dealmaking mood

Hong Kong’s Infrastructure Financing Facilitation Office looks to “get some deals done” with its partners, according to its deputy director Vincent Lee. 

The Hong Kong Monetary Authority established IFFO this July in an effort to ease infrastructure investments and project financing both locally and overseas. While the platform does not provide direct deal-matching services, it aims to facilitate experience and information sharing among its backers, which include investors, asset managers and developers.

As the latter can present proposals to potential investors through IFFO, Lee said the platform hopes to make announcements of deals completed among partners through the initiative in the medium-term. He added that the transactions do not need to be solely for projects developed under the China-led “One Belt One Road” initiative, but will serve as a demonstration of IFFO’s work. 

“However, we are under no illusion that this is a challenging area. We do not expect the deals will come very shortly after IFFO establishment in July while typically an infrastructure deal may take two to three years to materialise,” Lee said in an interview with Infrastructure Investor. 

In addition to encouraging collaboration among partners, HKMA itself is also looking to make infrastructure investments from the HK$3.57 trillion ($460 billion; €434 billion) Exchange Fund, the vehicle responsible for supporting Hong Kong’s currency. 

The authority is now reviewing some investment proposals submitted by asset managers and developers, some of which are partners of IFFO, said Lee, who is also the authority’s executive director.

He added that the Exchange Fund has a conservative attitude to risk and thus prefers working with experienced GPs who have established long-term relationships with HKMA. 

The fund is interested in commercially viable projects that generate stable income. It is open to investing in equity, debt or credit-enhanced products. “We plan to invest a small portion of the Exchange Fund in infrastructure projects. If we feel comfortable, we can surely invest more,” Lee said, adding that both the fund and the authority are new to the asset class. 

IFFO co-organised its first executive workshop with the International Finance Corporation and Asia-based asset manager Eastspring Investments in October, in a bid to build the capacity and knowledge required to undertake infrastructure investments. It also held a seminar earlier this month with Jin Liqun, president of the Asian Infrastructure Investment Bank. 

HKMA plans to invite more project developers and operators to join IFFO as partners. The platform is now backed by 54 Chinese and overseas entities comprising multilateral agencies and development banks, commercial lenders, law firms, advisors, institutional investors and asset managers.