World Bank group sees Hong Kong playing key role in emerging market infrastructure financing

The International Finance Corporation (IFC) has been seeking innovative ways to facilitate private involvement in infrastructure financing in emerging economies, with Hong Kong expected to play a key role in the initiative.

In the latest move the IFC has joined hands with Allianz, a German insurance company, which will invest US$500 million in IFC debt financing for infrastructure projects in emerging markets, Vivek Pathak, IFC’s director of East Asia and Pacific, said at the first executive workshop organised jointly by IFFO and IFC last week.

The IFFO refers to the Infrastructure Financing Facilitation Office established in July by the Hong Kong Monetary Authority to facilitate infrastructure investments and financing. It announced during the workshop that 13 more organisations would join its ranks, including top players such as AIA Group, Citi Group and Mizuho Bank.

Allianz is the first participant in an innovative programme called Managed Co-Lending Portfolio Programme (MCPP) for infrastructure financing, a loan-syndication initiative the IFC has launched to enable third-party investors to participate in IFC’s loan portfolio to access infrastructure projects in emerging markets. IFC originates, structures and administers the loans, and will also provide first loss protection.

In addition to Allianz, “we are also talking with other insurance companies,” said Pathak. “We expect to raise about US$3-$5 billion in the next few years through the programme.”

Hyun-Chan Cho, regional industry head of infrastructure and natural resources in Asia Pacific, IFC, said it aimed to raise a big pool of money. “When the IFC finds a bankable infrastructure projects, the money will be available for it.”