The vast infrastructure financing needs far exceed the fiscal capacity of governments and balance sheets of multilateral development banks. Notwithstanding the extensive private financing that can potentially be attracted, current participation of private capital in Asian infrastructure is quite low. Private financing is still predominantly provided by the banking sectors with the large Asian institutional investor pool untapped.
There is a significant need for AIIB to play a catalytic role to increase private and other investors’ appetite for investing in emerging market infrastructure as well as other productive sectors that are associated with and complementary to core infrastructure. This becomes even more important at times of increased financial distress and economic downturns when private capital withdraws from developing countries. AIIB's financing can be direct or indirect, with flexibility in how financings are structured. Investment may take a variety of forms, including loans, guarantees, or equity investments.
USD100 million in on-lending funds to Brazilian development bank Banco de Desenvolvimento de Minas Gerais S.A. (BDMG) for the BDMG Renewables and Asia Connectivity Facility will go toward supporting companies or institutions operating in renewable and infrastructure-related fields in and around Minas Gerais, a large inland state in southeastern Brazil.
Bayfront Infrastructure Management (“Bayfront”) was established in 2019 in connection with the Infrastructure Take-Out Facility (“TOF”) initiative, which was designed and structured by Clifford Capital to help mobilize institutional capital for infrastructure debt in Asia through issuance of infrastructure asset-backed securities ("IABS"). AIIB has been supporting this initiative as a 30% shareholder of Bayfront since inception.
The Bank’s long-term aim is to position itself as a “go-to” institution for providing infrastructure financing solutions in and to client countries.
Infrastructure for Tomorrow sets a clear mission for AIIB by requiring that all investments across infrastructure and other productive sectors should align and add value through one or more of the following four thematic priorities.