AIIB Makes First Equity Investment Into India
China’s wooing of India continues with the Asian Infrastructure Investment Bank (AIIB) announcing its first equity investment, signing off USD150 million in funding to the India Infrastructure Fund in a move aimed at attracting sought after private investment capital for infrastructure projects in India. The bank also announced that next year’s board of governors meeting will be held in Mumbai, in June 2018. India is the bank’s second largest shareholder and is becoming an increasingly important geography for AIIB investments.
“We appreciate the strong support provided by the Indian Government,” says AIIB vice president & corporate secretary, Danny Alexander. “It’s fitting that we bring the meeting to India next year, where we can deeply engage with local business and draw on the infrastructure expertise that India can offer.”
The surprise move away from the AIIB being seen as an OBOR vehicle fits in with AIIB President Jin Liqun’s vision for the bank, and has been keen to stress the independence of his bank from the Belt Road initiative and the importance of working closely with other entities such as the World Bank, the Asian Development Bank and national development institutions.
“Approving our first equity investment is another milestone for the bank and will enhance our potential to source and fund high quality, private sector projects,” comments D J Pandian, vice president and chief investment officer, AIIB.
The India Infrastructure Fund aims to invest in domestic mid-cap infrastructure companies, and the US$150 million commitment from the AIIB will help expand the bank’s equity and loan deal-sourcing pipelines in the private sector. The initiative will benefit local infrastructure development by enhancing private capital inflows from global long-term investors, such as public pension funds, endowments and insurance companies. Utilizing private capital is broadly acknowledged as a critical component to addressing the infrastructure gap in Asia. Infrastructure investment in Asia through to 2030 is estimated to cost about US$26 trillion, with the private sector expected to foot a large part of the bill. In 24 countries and regions and through to 2020 alone, this sector will be asked to invest US$250 billion per year. However, there are shortfall problems, as private investment in infrastructure development in Asia is currently about US$63 billion per year.
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