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Southeast Asia

AIIB and Singapore build for project finance

Asian Infrastructure Investment Bank and Clifford Capital have launched a new financing platform to remove some of the pressure on banks. It will also position Singapore as a leader in the sector.

Funding for project finance in Asia is in high demand as the region strives to update its infrastructure. Asian Development Bank has estimated that $1.5 trillion is needed every year until 2030 to keep up with the funding requirements. But finance has been lacking, with limited options available in the capital markets for private investors to buy, while banks’ balance sheets are stretched just keeping up with the huge demand.

Against that backdrop, the multilateral development bank Asian Infrastructure Investment Bank (AIIB) and Clifford Capital, a structured finance solutions provider backed by the Singapore government, set up the new Bayfront Infrastructure Management (BIM) platform in November.

The two partners hope to plug the funding gap by acquiring brownfield projects and infrastructure loans from banks, which have been the largest lenders in the sector, and repackaging them as securitized notes to be sold to institutional investors in the public market.

BIM will sponsor, structure and manage the issuances, working as an aggregator. Debt issued by BIM to acquire and warehouse loans from banks will have a guarantee from the government of Singapore, but the securitized products that BIM will structure and distribute will not.

AIIB will take a 30% equity stake in BIM, and Clifford Capital will hold the other 70%.

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