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AIIB anchors Gulf infrastructure fund with US$90 million commitment
Bank hopes participation will catalyze interest from Asian institutional investors
Michael Marray 6 Oct 2021

The Asian Infrastructure Investment Bank (AIIB) has come in as an anchor investor in Aberdeen Standard Investcorp Infrastructure Partners’ (ASIIP) new regional fund, committing US$90 million to its first close. ASIIP has also received a capital commitment from the Public Investment Fund (PIF) for up to 20% of the fund’s total size.

The fund aims to participate in the economic transformation of the Gulf Cooperation Council (GCC), with up to 15% also in the wider Middle East and North Africa (MENA) region. With environmental, social and governance principles and the United Nations Sustainable Developments Goals (SDG) at the heart of its philosophy, the fund aims to deliver solutions in health care, education, water, mobility and digital infrastructure for the benefit of local communities.

It seeks to raise between US$40 million and US$120 million, acquiring stakes anywhere between 10% and 100%. The term of the fund is 12 years, and the investment period is five years.

The GCC urgently needs to increase infrastructure investment to accommodate a 30% increase in population and a gradual increase in urbanization. Given current fiscal pressures, attracting more private capital is seen as key to meeting this funding gap. AIIB’s contribution will not only directly mobilize private capital the region needs by helping secure its first close but will also provide a halo effect that will encourage other investors to contribute to the fund.

“This is AIIB’s first commitment to an infrastructure fund in the region, which enhances the bank’s exposure and contributes to the diversification of the bank’s existing portfolio,” says AIIB director general (banking) Najeeb Haider. “By partnering with a leading global fund manager, the investments will also allow AIIB to leverage co-investment opportunities to acquire relevant market knowledge and gradually build sector expertise. Investing in infrastructure is critical for supporting the region’s long-term economic growth. AIIB’s participation will catalyze interest from Asian institutional investors in the fund and unlock potential for the region’s infrastructure development.”

“When we launched ASIIP, we combined Aberdeen Standard Investments’ strong track-record of investing in social infrastructure projects with Investcorp’s long-standing experience in the region, creating a vehicle that invests in sustainable core infrastructure projects,“ notes ASIIP chairman Michael Fallon. "With AIIB’s commitment, we will be able to contribute to the post-Covid-19 economic recovery in countries across the Middle East while generating value for our shareholders.”

 

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