The International Finance Corporation, IFC, the private sector arm of World Bank Group, has launched a new programme that aims to raise $5 billion from global institutional investors to modernize infrastructure in emerging markets over the next five years.
The initiative is also expected to open up a new stream of capital flows to improve power, water, transportation, and telecommunications systems in developing countries.
The initiative, called MCPP Infrastructure, 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.
According to the Corporation, the first phase of the programme will lead to allocation of $3 billion from the People’s Bank of China across 70 deals in less than two years, thereby demonstrating how large investors can benefit from delegating the processes of deal origination and approvals to IFC.
The first partnership under the programme was signed with the global insurance company Allianz. Under the agreement, Allianz intends to invest $500 million, which will be channeled into IFC debt financing for infrastructure projects in emerging markets.
IFC is also in advanced discussions with Eastspring Investments, the Asian asset managementm business of Prudential, for a commitment of $500 million.
Similar discussions are being conducted with AXA, also for a commitment of $500 million. MCPP Infrastructure is designed for institutional investors seeking to increase their exposure to emerging-markets infrastructure.
IFC will originate, approve, and manage the portfolio of loans that will mirror IFC’s own portfolio in infrastructure. It will do so in a manner agreed upfront with its partner investors, always subject to the overall governance of the platform.
Speaking on the investment initiative, the Corporation’s Executive Vice President and CEO Philippe Le Houérou explained that “modern infrastructure is essential for economic growth and lasting prosperity.
“Yet a huge investment gap exists in this sector—totaling trillions of dollars a year in emerging markets alone.
MCPP Infrastructure marks a breakthrough in the search for largescale 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”, Le Houérou added.
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