The IFC, a member of the World Bank Group, aims to raise $5 billion from global institutional investors to modernise infrastructure in emerging markets.
The MCPP Infrastructure programme, as the initiative is called, builds on the success of the Managed Co-Lending Portfolio Programme, which enables investors to participate in IFC’s senior loans portfolio. As an example, it allocated $3 billion from the Peoples’ Bank of China across 70 deals in less than two years, which it said showed the benefits of delegated deal origination and approval to the IFC.
Under the infrastructure programme, which will raise funds to improve power, water, transport and telecommunications systems in developing countries, the first partnership has been signed by Allianz, who plan to invest $500 million in IFC debt financing for infrastructure projects in developing countries. IFC is also in advanced discussions with Eastspring Investments, the Asian asset management business of Prudential, for another $500 million commitment. As with other institutional investors, taking part in the initiative, the IFC will originate, approve and manage a portfolio of loans that will mirror the IFC’s own portfolio. The Swedish International Development Cooperation Agency (SIDA) is expected to support a limited first-loss guarantee by the IFC, so investments will meet the risk-reward profile that institutional investors seek.
IFC executive vice president and CEO, Philippe Le Houérou, commented: “Modern infrastructure is essential for economic growth and lasting prosperity. Yet a huge investment gap exists in this sector – totalling trillions of dollars a year in emerging markets alone. MCPP Infrastructure marks a breakthrough in the search for large-scale financing solutions to the challenges of development. It is a key building block in the global effort to move from billions to trillions in development finance.”