The private sector arm of the Inter-American Development Bank has clinched its first backer since rebranding as IDB Invest to help fund Latin American infrastructure projects.
Colombian bank Financiera de Desarrollo Nacional has committed 330 billion Colombian pesos ($109 million; €93 million) to IDB Invest and 270 billion pesos to IDB, which together equals around $200 million. The funding is to be invested in Colombian infrastructure projects and specifically a telecommunications initiative called the 4G Track Program.
Two weeks ago, the Inter-American Investment Council, the investment arm of IDB managing an $11.6 billion portfolio, changed its name to IDB Invest as part of a strategy shift that will feature an “expanding private sector focus”. IDB Invest said in a statement it seeks to grow its portfolio by increasing its focus on infrastructure and corporate investments.
“If you have a bold idea, talk to us. If you want to push into underserved markets, give us a call. And if you are the kind of company that takes big risks in areas like energy, transportation or agribusiness, then we are the partner you want at your side,” said IDB president Luis Alberto Moreno.
The future role multilateral development banks should play in financing emerging market infrastructure has been hotly debated throughout the year. In April, the world’s leading MDBs met at the United Nations-backed Global Infrastructure Forum in Washington DC and agreed to find ways to make the infrastructure asset class more attractive to institutional investors.
One suggestion about how to do that was for MDBs to de-risk projects, acting less like a financial institution and more like an investing partner.
“It is of key importance to develop bankable projects,” Morten Lykke Lauridsen, a senior economist at the International Finance Corporation’s Thought Leadership Unit, told Infrastructure Investor in April. “MDBs have a key role to play in de-risking and bringing in institutional investors.”