Bank Seminar: Institutional Finance for Infrastructure (June 26, 1145-1315), Rooftop, Trident

Objectives

  • Help the Bank refine its approach for implementing the important thematic priority of Private Capital Mobilization, specifically with respect to Institutional Investors.
  • Hear from leading Institutional Investors the constraints that prevent them from supporting emerging markets infrastructure.
  • Consider Institutional Investors views on what could be done to address these issues; and
  • Outline the products that AIIB could offer to assist in addressing these constraints.


Background

The infrastructure financing gap in Asia is significant and growing. Existing sources of capital for emerging markets’ infrastructure are insufficient to fill the gap. According to research from consultants at McKinsey, during the 15 years between 2015 and 2030, new infrastructure demand in Asia could amount to US$38 trillion. Of this, US$17 trillion could be financed from sources, which can be identified based on historical information. This leaves a financing gap of $21 trillion, which translates into an annual supply of $1.1 trillion and an annual gap of $1.4 trillion. Given constraints in government budgets, the way forward is to mobilize private capital.

Assets under management by Institutional Investors are large and growing. The OECD estimates that by 2030, the funds managed by large insurance companies, pension funds and other Institutional Investors could reach US$106 trillion. Infrastructure assets offer many characteristics that make them well-suited to Institutional Investors’ needs: the long-term nature of infrastructure assets matches the long-dated exposure of pension payouts and insurance policies; revenues are often contracted, subject to lower volatility than other alternatives and may provide an inflation hedge; and infrastructure assets may offer attractive risk-adjusted cash yields over a long period of time.

However, Institutional Investors’ current allocation to Emerging Market infrastructure assets is insignificant compared with the potential. Funds are primarily directed to developed markets, despite historically low interest rates and an unprecedented search of capital for yield.


Possible Discussion Topics

  • The AIIB narrative of supporting infrastructure in the Bank’s member countries.
  • Progressing the discussion on mobilizing private capital for infrastructure, with a focus on Institutional Investors.
  • Working with AIIB.
  • The products and structures AIIB should focus on from an Institutional Investor perspective.
  • How can AIIB be different and responsive to client and financing partner requirements.

Speakers

Mr. Alan S. MacDonald-Vice-Chairman, Citibank (Moderator)

He also is Chief Client Officer of Citi; Chair of Citigroup’s Pension Funds Committee and member of the Business Development Committee. Prior to assuming his current position, Mr. MacDonald was Chief Operating Officer of Global Corporate and Investment Banking. From 1998 to 2004, he was head of the Global Corporate Bank. From 1996 to 1998 he was co-head of Global Markets with responsibility for Citibank’s corporate finance activities worldwide. Prior to joining Citicorp, Mr. MacDonald was an economist with the United Nationals Economic Commission for Europe based in Geneva, Switzerland from 1971 to 1974. Mr. MacDonald has a Bachelor of Science from Drexel University (1966), Master of Science Degree from London School of Economics (1968) and a Doctorate in Economics at Cambridge University (1971).

Mr. Shaukat Aziz-Former Prime Minister of Pakistan and IAP

His Excellency Mr. Shaukat Aziz was elected as Prime Minister of Pakistan and served from 2004 – 2007, following five years as Finance Minister from 1999.

Mr. Aziz was the first Prime Minister of Pakistan to complete a full term in office. Mr. Aziz restored his country’s credibility at home and abroad and is renowned for his strategic approach, structural reforms, transparency and ability to focus on what is best, not simply what is politically expedient. His policies were based on the principals of liberalization, deregulation and privatization, accompanied by strong regulatory oversight. Mr. Aziz’s tenure was marked by high economic growth, increase in per capita income, reduction in poverty, an upsurge in investments and improved debt and economic indicators.

After graduating from Gordon College, Rawalpindi in 1967, Mr. Aziz gained a MBA degree from the Institute of Business Administration, University of Karachi. An internship at Citibank marked the beginning of a 30 year career in global finance, encompassing roles in Pakistan, Greece, United States, United Kingdom, Malaysia, Philippines, Jordan, Saudi Arabia and Singapore. As Executive Vice President, he held several senior management positions in Citibank including head of institutional banking for Central Eastern Europe, the Middle East and Africa and later for Asia Pacific, followed by Chief Executive of the banks global wealth management business.

He became Finance Minister in 1999 and was named “Finance Minister of the year” for 2001 by both Euromoney and The Banker magazines published in the United Kingdom. In 2013 Mr Aziz was awarded Global Leadership in Islamic Finance Laureate by the Edbiz Corporation, a think tank specialising in Islamic financial intelligence, advisory, advocacy and literacy.

As Prime Minister, Mr. Aziz co chaired the UN Secretary Generals Committee to promote reform and coherence at the United Nations. As recognition of his services to Pakistan, he was awarded an Honorary Doctor of Laws by his Alma Mater, The Institute of Business Administration, University of Karachi, Pakistan. In 2014 Mr. Aziz was appointed Senior Visiting Research Fellow at Green Templeton College, Oxford University, United Kingdom, where he also chairs their annual Emerging Markets Forum. In September 2014, Mr. Aziz received an Honorary Doctorate in Business Administration from the East Asia University, Bangkok Thailand.

Having presided over impressive economic growth in his country, Mr. Aziz offers an expert view and is a frequent speaker on the challenges facing the world including structural reforms, diplomacy, geopolitics and security. Mr. Aziz is a member of several boards and advisory boards of various commercial and non-profit entities around the world. Mr. Aziz’s book, ‘From Banking to the Thorny World of Politics’, was published by Quartet in May 2016 and is available on Amazon.com.

Mr. Thierry de Longuemar-Vice Present and Chief Financial Officer, AIIB

Mr. Thierry de Longuemar is responsible for the design and implementation of AIIB’s financial strategies and policies, including oversight of the Controller and Treasury departments. He previously served as both the Treasurer and Vice President of Finance at the Asian Development Bank and the African Development Bank. His career extends to the private sector where he worked in progressively senior roles in banking and energy, including postings at ABN AMRO, Credit Agricole, Compagnie Bancaire and TOTAL. Mr. de Longuemar graduated from l’Ecole des Sciences Economiques et Commerciales (ESSEC) in 1978. He is a national of France.

Ms. Anita Marangoly George-Executive Vice-President, Growth Markets, CDPQ

Her mandate is to implement a key pillar of CDPQ’s strategy, which aims to increase its international exposure in targeted growth markets by sourcing the best investment opportunities and by developing the organization’s network of sustainable and high-quality local partnerships. She is responsible for the New Delhi office, and sits on the Executive Committee of CDPQ global as well as the Investment-Risk Committee. Ms. George holds a BA in Economics and Spanish from Smith College, in Massachusetts, and a Masters in Economics and a MBA in Finance from Boston University.


Mr. Donald P. Kanak-Chairman, Eastspring Investments, Prudential Corporation Asia Ltd.

He served as Executive Vice Chairman and Chief Operating Officer at American International Group, Inc. from March 14, 2005 to January 31, 2006 and Co-Chief Operating Officer since January 1, 2004. He served as Executive Vice President of American International Group, Inc. from 2002 to January 31, 2006. Mr. Kanak joined AIG in January 1992 with responsibility for AIG's life insurance business in Japan and Korea, based in Tokyo. In March of 1995, Mr. Kanak was appointed President and Chief Operating Officer of the AIG Companies in Japan and Korea and became President and Chief Executive Officer in January 2001. Mr. Kanak was named AIG Vice President in February 1999 and Executive Vice President in 2002. Mr. Kanak holds a B.A. degree in Economics with highest honors from the University of North Carolina at Chapel Hill, a Juris Doctor degree with honors from Harvard Law School and a Master's degree in Management Studies from Oxford University, England. He also holds the Chartered Life Underwriter (CLU) and Chartered Financial Consultant (ChFC) designations of the American College.

Dr. Ngozi Okonjo-Iweala-Former Managing Director at World Bank, Finance Minister of Nigeria, and IAP

Dr Ngozi Okonjo-Iweala is Chair of the Board of Gavi, the Global Alliance for Vaccines and Immunisation. Since its creation in 2000, Gavi has immunised 580 million children globally and saved 8 million lives. She is also Senior Adviser at Lazard, one of the world’s premier financial advisory and asset management firms.

Previously, Dr Okonjo-Iweala served twice as Nigeria’s Finance Minister, from 2003-2006, 2011-2015, and briefly Foreign Minister, the first woman to hold both positions. She spent a 25-year career at the World Bank as a development economist, rising to the No.2 position of Managing Director, overseeing an $81 billion operational portfolio in Africa, South Asia, Europe and Central Asia.

Dr Okonjo-Iweala has been ranked by Fortune as one of the 50 Greatest World Leaders in 2015, by Forbes as one of the Top 100 Most Powerful Women in the World consecutively for four years, by Time as one of the Top 100 Most Influential People in the World in 2014, and by the UK Guardian as one of the Top 100 Women in the World in 2011.

Dr Okonjo-Iweala holds a Bachelors in Economics from Harvard University and a PhD in Regional Economics and Development from the Massachusetts Institute of Technology. She has received honorary degrees from over a dozen universities, including Yale, Brown, the University of Pennsylvania, and Trinity College, Dublin. She is the author of numerous articles on finance and development, and several books including Fighting Corruption is Dangerous: The Story Behind the Headlines and Reforming the Unreformable: Lessons from Nigeria, both published by the MIT Press.