IFC programme gains US$1 billion investment from Hong Kong Monetary Authority

16th October 2017 Jack Aldane

A programme for institutional investors to passively participate in the future loan portfolio of International Finance Corporation (IFC) has received US$1 billion from the Hong Kong Monetary Authority (HKMA).

The authority signed the agreement with IFC to invest in the platform for emerging markets and support the financing in more than 100 countries of projects for infrastructure, telecommunications, manufacturing and agribusiness.

Giving investors a stake in the portfolio for these projects form “an essential part of IFC’s business development in emerging markets”, according to Dimitris Tsitsiragos, IFC’s vice president for new business, who spoke at the signing ceremony.

He added: “The HKMA’s participation in MCPP will allow IFC to provide more financing to projects, benefiting millions of people by creating jobs, raising living standards, and improving connectivity.”

Investors in the programme include the People’s Bank of China, on behalf of which China’s state administration for foreign exchange has already committed US$3 billion over six years. IFC will also offer co-investment opportunities to all investors as part of the agreement, with conditions on the eligibility of loans as well as the borrower’s consent. The programme’s investments match IFC’s A Loan terms, according to IFC’s website, which provides an additional source of long-term capital for IFC clients in emerging markets.

Also present at the signing was Norman Chan, CEO of the HKMA, who said:

“Emerging markets present a broad array of untapped investment opportunities with good long-term growth potential. Joining hands with IFC allows long-term institutional investors like the HKMA to ride on the considerable expertise, experience and network of IFC in sourcing investable opportunities with proper risk management and governance framework.”

Jingdong Hua, Vice President and Treasurer of IFC, said the programme has received “keen interest from the market”, allowing for the total the amount of financing to double to around US$6 billion, adding funding for “vital projects that will also help the poor.”

Part of the programme known as MCPP Infra is expected to raise US$5 billion in private capital for investment in emerging market infrastructure loans within the next five years. Allianz Global Investors, acting as a subsidiary of global insurance giant Allianz, has invested US$500 million, and is the first partner to come onto the infrastructure segment of the platform.

Through this segment, IFC will provide credit enhancement by investing in a junior first-loss tranche on these loans, creating a risk-return profile that mirrors investment grade standards and so attracting more capital to infrastructure projects in high-risk regions.

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