Private Equity News & Analysis

China’s Exim Bank targets $1bn infrastructure fund

The Export-Import Bank of China is making an anchor commitment of $300m to the fund, which will invest in infrastructure projects in ASEAN countries.

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Beijing-based Export-Import Bank (Exim Bank) of China is targeting commitments of $1 billion for a private equity fund focused on investments in the infrastructure sector in member countries of the Association of Southeast Asian Nations (ASEAN).

China-ASEAN Investment Cooperation Fund will be seeded with an anchor commitment of $300 million or more from Exim Bank. Three other Chinese institutions will be cornerstone investors in the fund, with a combined commitment of an additional $500 million, according to the website of the International Finance Corporation (IFC).

The IFC is seeking to make the lesser investment of either $100 million or 20 percent of the capital raised by the fund. If the proposed commitment is approved by the IFC’s board, the private investment arm of the World Bank will also be offered an 8 percent stake in the fund management company of the general partner, it said on its website.

China-ASEAN Investment Cooperation Fund's geographic mandate is to invest in the ten member states of the ASEAN grouping. It will focus on equity and equity-linked investments for minority as well as control stakes in companies in sectors such as transportation facilities, public works, telecommunication networks, energy and resources.

In its summary of the fund investment proposal, the IFC states that infrastructure investment is one of the key challenges confronting Asian economies. Economic growth, trade and commerce and living standards in the region have been constrained due to underdeveloped power, water, transportation and sanitation sectors and the region’s governments cannot meet the infrastructure funding requirements by themselves. The large funding gap needs to be addressed by increasing the role of the private sector in the development of infrastructure projects, the investment group says.

The ASEAN grouping of countries comprises of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Exim Bank was not immediately available for comment.