ADB, GSIS, Macquarie set up $625-M infra fund

Rappler.com
Four local and foreign groups, including GSIS and ADB, are investing in an almost P27-billion private equity fund to finance infrastructure projects in the Philippines

MANILA, Philippines (UPDATED) – Four local and foreign groups, including state pension fund Government Service Insurance System (GSIS), are investing in a $625 million (almost P27 billion) private equity fund to finance big-ticket infrastructure projects under the Philippines’ public-private-partnership (PPP) scheme.

On Tuesday, July 31, the Manila-based Asian Development Bank (ADB), as well as Dutch pension asset manager Algemene Pensioen Groep (APG) and the Macquarie Group, announced details of the equity fund called Philippine Investment Alliance for Infra Fund (PINAI).

GSIS president and general manager Robert Vergara called the PINAI “the largest infra fund ever assembled for the country” and will be managed by Macquarie Infrastructure and Real Assets (MIRA), the world’s largest infrastructure fund manager.

Vergara said the state pension fund contributed up to $400 million, making it the largest investor among the fund participants. ADB put up $25 million, and the rest was put up by APG and the Mcquarie Group.

At the Tuesday press briefing, MIRA Managing Director Frank Kwok explained that the fund targets to finance 5 to 10 infrastructure projects worth a maximum of $125 million each.

Kwok also said that the fund can be used to finance power distribution and generation, transportation, airports, mass transportation, natural gas or renewable energy, utilities including water, and social infrastructure projects.

“Over the last few years, we’ve been reviewing Southeast Asia as a potential region to invest in infrastructure and establish an infrastructure fund. In our review, we believed the Philippines to be one of the most promising, if not the most promising country to establish an infrastructure fund and investing in infrastructure,” Kwok said.

“The fund will invest in Philippine core infrastructure assets with an initial focus on existing projects that need expansion or rehabilitation, but will also be in a position to support the development of critical infrastructure projects from the ground up,” ADB said in a statement.

Infrastructure financing

The Aquino government has said capital intensive road, rail, and airport projects under its PPP scheme will help stimulate the Philippine economy.

Citing the Philippine Development Plan, ADB said that around 12% of the country’s $120 billion investment requirements need to come from the private sector.

Earlier, local banks awash with cash  said they are looking at participating in funding infrastructure projects too.

The GSIS group, which manages the pension fund of its 1.4 million members from the government sector, had said aims to diversify its fund portfolio to include high-yielding investment opportunities in the country.

“Our participation in the fund will contribute to economic growth and investors’ confidence. This will also mean enhanced returns on our investments which will redound to the greater benefit of our members and pensioners,” Vergara said.

PINAI will be managed by Macquarie Infrastructure and Real Assets (MIRA), the largest infrastructure fund manager globally, with approximately $97 billion of assets under management across 24 countries.

In a separate statement, the Macquarie Group cited its “successful track record” in setting up similar infrastructure funds in new markets like China, India, Mexico, Africa and Russia as well as its access to infrastructure experts.

APG, on the other hand, manages pension assets totaling about €302 billion (around $370 billion) from over 4.5 million active and retired participants from the public and private sector in the Netherlands. – Rappler.com

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