The Asian Infrastructure Investment Bank (AIIB) and Clifford Capital Pte. Ltd. (Clifford Capital) have announced the establishment of Bayfront Infrastructure Management Pte. Ltd. (BIM), a first-of-its-kind platform designed to mobilize a new pool of institutional capital for infrastructure debt in Asia. AIIB and Clifford Capital will take a 30-percent and 70-percent equity stake in BIM, respectively.
BIM’s objective is to address the infrastructure financing gap in the Asia-Pacific region. This will be achieved by facilitating the mobilization of private institutional capital into the infrastructure financing market. It will unlock capital for infrastructure financing by facilitating the recycling of capital and liquidity by banks that have traditionally been the largest lenders in this sector.
BIM will acquire predominantly brownfield project and infrastructure loans from financial institutions, warehouse and manage them, with the objective of distributing securitized notes to institutional investors in the public markets. BIM will also sponsor, structure and manage such distribution issuances and invest in the equity tranches or vertical slices of its securitization issuances to demonstrate alignment of interest with investors.
The platform will benefit existing bank lenders as it relieves their capital constraints by purchasing on-balance sheet exposures. It also provides global institutional investors with unique access to a diversified project and infrastructure loan portfolio through a new investable asset class that is more accessible.
Debt instruments issued by BIM to acquire and warehouse loans from banks are expected to benefit from a guarantee provided by the Government of Singapore (Government Guarantee). This Government Guarantee will not cover the securitized products BIM will structure and distribute to investors.
The establishment of BIM builds on the successful issuance of Asia’s first securitization of project finance and infrastructure loans through Bayfront Infrastructure Capital (BIC), launched in Singapore in 2018. The BIC transaction demonstrated the viability of the Infrastructure Take-Out Facility (TOF) concept. With BIC progressing to a new phase, all future issuances in relation to the TOF will now be undertaken by BIM.
AIIB Vice President and Chief Investment Officer D.J. Pandian said: “AIIB’s investment in BIM is closely aligned with our objectives of developing Asian infrastructure as an asset class and supporting private capital mobilization. Through robust environmental, social and governance criteria, the platform provides institutional investors with a unique opportunity to support sustainable infrastructure projects in Asia. We are delighted to work with a highly experienced senior management team that has deep domain knowledge in infrastructure finance.”
Clifford Capital Chief Executive Officer (CEO) Clive Kerner said: “This is an important milestone for Clifford Capital as we progress from the successful launch of the Infrastructure Takeout Facility with BIC to the establishment of BIM. We also welcome the participation of AIIB as a strategic partner in this landmark platform that addresses market gaps for infrastructure financing in Asia.”
BIM CEO-designate Premod Thomas said: “Leveraging on the success of BIC, we are now committed to developing BIM as a long-term sustainable platform to encourage institutional investor participation in the fast-growing infrastructure funding needs in Asia-Pacific and the Middle East. We look forward to working with AIIB and our bank partners as we leverage our platform to create sustainable investment products for institutional investors.”
Monetary Authority of Singapore Executive Director and Head of Financial Markets Development Gillian Tan said: “Singapore has attracted a diverse mix of industry expertise and networks as part of its ambition to be a full-service Asia infrastructure financing hub. This first-of-its-kind platform demonstrates how infrastructure can be developed as a mainstream, investible asset class for mobilizing institutional capital.”
BIM is expected to be capitalized at USD1.98 billion, comprising USD180 million in equity and USD1.8 billion in debt issuance capacity. AIIB will invest USD54 million, representing 30 percent of BIM’s equity capital, with the remaining USD126 million contributed by a new holding company to be established by Clifford Capital.
The equity commitments from its shareholders and the proposed Government Guarantee are subject to the execution of final documentation. BIM is expected to be operational from the first quarter of 2020.
Additional information about the project can be found here.
About AIIB
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia. Headquartered in Beijing, we began operations in January 2016 and have now grown to 100 approved members worldwide. By investing in sustainable infrastructure and other productive sectors in Asia and beyond, we will better connect people, services and markets that over time will impact the lives of billions and build a better future.
About Clifford Capital
Clifford Capital is a specialist provider of project and structured finance solutions established with support from the Government of Singapore to address gaps in project financing markets, assisting the internationalization of Singapore-based companies in the infrastructure and maritime sectors. It also seeks to catalyze further development of a capital market in Singapore focused on the infrastructure sector. Clifford Capital’s shareholders comprise DBS Bank, John Hancock Life Insurance Company (Manulife), Prudential Assurance Company Singapore, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation and Temasek Holdings.
