The Asian Development Bank (ADB) on Tuesday committed to an investment that completes fundraising for the Philippines’ first private fund for infrastructure projects.
Called the Philippine Investment Alliance for Infrastructure (PINAI), the US$625 million fund aims to close the financing gap for new and existing infrastructure projects in the areas of transport, power, renewable energy, water and telecommunications.
Fund manager Macquarie Infrastructure and Real Assets (MIRA), a subsidiary of Australian bank Macquarie, will oversee PINAI on behalf of investors - which include ADB, the Philippine Government Service Insurance System (GSIS) pension fund, Dutch pension fund manager APG and Macquarie.
“The Philippines requires significant investment in infrastructure to meet the needs of what is one of the youngest and fastest growing populations in Asia,” MIRA managing director of Asia Frank Kwok said in a statement.
PINAI will invest in five to 10 projects ranging from $50 million to $125 million each, with a long term investment time frame of up to 12 years. It will start with existing projects that need expansion or rehabilitation.
Now closed to new investors, the PINAI fund joins other emerging market funds from MIRA, which include funds in China, India, Mexico, Africa and Russia.
ADB director general of private sector operations Philip Erquiaga told Eco-Business in an e-mail interview that ADB’s monetary investment would be $25 million, but noted that ADB’s contribution would leverage additional infrastructure funding from foreign and domestic private investors.
“The amount we contribute is secondary to the multiplier effect and market signal that ADB brings as a cornerstone investor. Both are the more significant factors and most meaningful in this landmark partnership,” he said.
The Philippine government’s Development Plan states that around 12 per cent of the country’s $120 billion investment requirements need to come from the private sector, noted ADB.
According to ADB’s June Development Effectiveness Brief on the Philippines, low investor confidence and perceived weak governance have led to sluggish private investment in infrastructure, which averaged 2.1 per cent of GDP from 2000 to 2009. Peak investment was 15.5 per cent in 1997.
President of the Philippines GSIS pension fund Robert Vergara said the PINAI partnership would contribute to economic growth and help restore investor confidence.
“This will also mean enhanced returns on our investments… to the greater benefit of our members and pensioners,” he added.
