IFC launches $5bn EM infrastructure platform

Allianz will commit $500m to the emerging market platform with another $1bn potentially coming from Eastspring and AXA.

IFC, the investment arm of the World Bank Group, has launched a $5 billion infrastructure programme called MCPP Infrastructure to finance infrastructure development in emerging markets.

The programme will aim to raise $5 billion from global institutional investors to modernise infrastructure in emerging markets over the next five years, improving the power, water, transportation, and telecommunications systems in developing countries.

“Modern infrastructure is essential for economic growth and lasting prosperity,” said IFC executive vice president and CEO Philippe Le Houérou. “Yet a huge investment gap exists in this sector—totaling trillions of dollars a year in emerging markets alone.”

The first partnership under the programme was signed with global insurance company Allianz. Under the agreement, Allianz will invest $500 million into IFC debt financing for infrastructure projects in emerging markets. IFC is also in advanced discussions with Eastspring Investments, the Asian asset management business of Prudential, and AXA, for a commitment of $500 million each.

“We work to ensure that our activities are profitable and sustainable. We create long-term value by embedding sustainability in our core business. The partnership with IFC and our co-investment in infrastructure is a perfect example how Allianz can provide thought leading investment expertise to support the economic development of emerging countries as well as serving the interest of our customers,” added Oliver Bäte, CEO of Allianz.

The IFC will originate, approve, and manage a portfolio of loans that will mirror IFC’s own infrastructure portfolio.

With expected support from the Swedish International Development Cooperation Agency (Sida), the IFC will provide a limited first-loss guarantee on the investments to meet the risk-reward profile that institutional investors require.

The programme builds on the success of IFC’s Managed Co-Lending Portfolio Program, a loan-syndications initiative that enables third-party investors to participate passively in IFC’s senior loan portfolio. The programme allocated $3 billion from the People’s Bank of China across 70 deals in less than two years.

In the past decade, the IFC has invested over $45 billion, including funds mobilised from other investors in infrastructure and natural resources companies. In the fiscal year 2015, IFC’s commitments in such projects reached $5.8 billion.