The Asian Infrastructure Investment Bank (AIIB) is committing USD60 million to Bayfront Infrastructure Management’s (Bayfront) debut issuance of infrastructure asset-backed securities (IABS). AIIB’s anchor investment will set an important benchmark for future infrastructure asset-backed securities, which are a critical part of the market-building process for new asset class creation.
To date, Asian infrastructure has been primarily financed through bank loans, which are not suitable for many institutional investors due to investment restrictions. IABS can help bridge the infrastructure financing gap by allowing investors to invest in rated and listed debt securities backed by a diversified portfolio of project and infrastructure loans. The total issuance by Bayfront will offer investors access to a USD401-million portfolio of 27 project and infrastructure loans, diversified across 13 countries and eight industry subsectors.
This is AIIB’s second investment related to Bayfront, the first being the Bank’s investment in the corporation as a 30-percent minority shareholder, which was approved by AIIB’s Board of Directors in 2019. Co-established by AIIB and Clifford Capital, Bayfront is Asia’s first fully-fledged infrastructure securitization platform. It aims to address the infrastructure financing gap in the Asia Pacific region by facilitating the mobilization of private institutional capital into the infrastructure financing market.
“This milestone demonstrates AIIB’s commitment to scale up its sustainable and inclusive investments to meet clients’ needs for low-carbon and climate-resilient infrastructure. It will also help us move forward in achieving our objective to develop Asian infrastructure as an asset class,” said AIIB Director General (Banking) Najeeb Haider, “The demand for more investment in Asia is huge and we will continue to work with partners, like Bayfront, who are developing innovative products to attract private investment into emerging market infrastructure.” AIIB’s partnership with Bayfront is just one of the Bank’s efforts to support private capital mobilization. The investment is aligned with AIIB’s aim to achieve a 50-percent share of approved private-sector financing by 2030.
Bayfront's use of robust environmental, social and governance criteria provides institutional investors with a unique opportunity to support sustainable infrastructure projects in Asia. Premod Thomas, Chief Executive Officer of Bayfront, said, “Bayfront is committed to the mobilization of institutional investment in infrastructure financing and intends to be a frequent issuer of IABS transactions going forward. We aim to grow our network of 22 partner banks and gain greater access to infrastructure loans, especially in relation to sustainable assets. Reaching a wider network of institutional investors through our IABS issuances and other potential distribution channels is a key part of our strategy to develop a new asset class to help address the large infrastructure financing gap in Asia Pacific.”
“The securitization market is a potential solution to Asia’s infrastructure financing gap because it provides institutional investors a way to access Asian infrastructure assets,” said Stefen Shin, Principal Investment Officer at AIIB. “The debut investment will facilitate the growth of the securitization market in Asia. This, in turn, will diversify infrastructure funding channels and crowd in institutional capital for the region’s infrastructure financing needs.”
Additional information about the project can be found on AIIB’s website.
About AIIB
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank whose mission is financing the Infrastructure for Tomorrow—infrastructure with sustainability at its core. We began operations in Beijing in January 2016 and have since grown to 103 approved members worldwide. We are capitalized at USD100 billion and Triple-A-rated by the major international credit rating agencies. Working with partners, AIIB meets clients’ needs by unlocking new capital and investing in infrastructure that is green, technology-enabled and promotes regional connectivity.
About Bayfront Infrastructure Management Pte. Ltd.
Launched in November 2019, Bayfront Infrastructure Management Pte. Ltd. (“Bayfront”) is a platform designed for institutional investors to access Asia Pacific infrastructure debt. It seeks to address the infrastructure financing gap in the Asia Pacific region by facilitating the mobilization of private institutional capital into the infrastructure financing market.
Bayfront 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. Bayfront is capitalized at US$1.98 billion, comprising US$180 million in equity and US$1.8 billion in debt issuance capacity. The equity capital is committed by Clifford Capital Holdings and the Asian Infrastructure Investment Bank on a 70/30 basis respectively. Debt instruments issued by Bayfront to acquire and warehouse loans from banks benefits from a guarantee provided by the Government of Singapore.
