Prudential PLC said its wholly-owned subsidiary, Eastspring Investments has invested USD500 million in IFC program that mobilizes funds from institutional investors for infrastructure projects in emerging markets.
Eastspring is the first Asian investor to participate in the program, known as MCPP Infrastructure. The signing ceremony was hosted by Norman Chan, Chief Executive of the Hong Kong Monetary Authority (HKMA).
The program seeks to raise $5 billion from global institutional investors to modernize infrastructure in emerging markets by 2021, opening up a new stream of capital flows to improve power, water, transportation, and telecommunications systems in developing countries.
“Building sustainable infrastructure strengthens economies, allows for cross-border business, and helps create new markets,” IFC Vice President and Treasurer, Jingdong Hua said at Wednesday’s signing. “This new partnership with Eastspring will help bring reliable power, roads, and other critical infrastructure to areas where they are urgently needed. IFC will continue to work with governments and investors to mobilize additional resources for infrastructure development in developing countries.”
“We look forward to working with IFC on this initiative. As a business with a strong focus in the developing world, we have long been committed to realising the full growth and development potential of emerging markets. Raising awareness and boosting infrastructure investment is a crucial part of that and we are always looking for innovative and sustainable ways to provide attractive long term returns for our clients. This partnership enables us to make a significant contribution to the economies and communities of developing countries while investing in infrastructure projects that deliver compelling returns for our clients,” said Virginie Maisonneuve, Chief Investment Officer of Eastspring Investments.
In most developing countries basic infrastructure is failing, insufficient, or non-existent—compromising livelihoods and holding back economies. More than 1.2 billion people worldwide have no access to electricity. More than 660 million people don’t have a clean source of drinking water and one in three people worldwide lack access to sewage infrastructure. With the number of people living in cities in Asia estimated to double by 2030, the infrastructure deficit will only become larger.
Under the agreement IFC will originate transactions and provide Eastspring with co-lending opportunities in all deals that fit with Eastspring’s investment strategy.
Commenting on this partnership, Tony Adams, Infrastructure CIO at Eastspring Investments said, “The G20 and other global institutions have been calling on multilateral lenders and the private sector to find ways to help close the global gap in infrastructure funding. The structure of this partnership breaks new ground in providing a credit enhanced platform for our clients to participate in a portfolio of emerging market infrastructure loans. It also develops our access and capability to lend directly to compelling infrastructure projects.”
“I am delighted to host the signing ceremony between IFC and Eastspring, both of whom are valuable partners of the HKMA Infrastructure Financing Facilitation Office (IFFO)”, said Norman Chan, Chief Executive of the HKMA. “Trillions of dollars a year are required to bridge the infrastructure gap in emerging markets, and it is impossible for the public sector alone to fulfil such needs without substantially drawing in private sector capital. Through the IFFO platform, we look forward to collaborating more closely with public and private sector stakeholders, with a view to developing a more conducive environment in Hong Kong for facilitating infrastructure investment and financing. ”MCPP Infrastructure is designed for institutional investors seeking to increase their exposure to emerging markets infrastructure. Through the program, IFC originates, approves, and manages a portfolio of loans that mirrors IFC’s own portfolio in infrastructure.
With support from the Swedish International Development Cooperation Agency (Sida), IFC provides a limited first-loss guarantee on the program’s investments to meet the risk-reward profile that institutional investors require. The other first mover partnership under the MCPP Infrastructure program is the global insurance company Allianz.
