The Asian Infrastructure Investment Bank (AIIB) will soon provide scarce capital to early-stage companies through small-scale venture capital (VC) funds, thereby promoting innovation in green and technology-enabled infrastructure across AIIB members.
The Bank has launched the AIIB Venture Capital Investment Program for Green and Technology-Enabled Infrastructure, mobilizing USD100 million with an additional USD30 million as a co-investment sleeve for its first inaugural VC program for sustainable infrastructure.
Despite the prolonged economic uncertainties in the global markets, VC investment has exhibited continued strength in South and Southeast Asia and collectively across the Caucasus, Central Asia, Africa and the Middle East. However, these regions are facing less representation, which invites further capital to bridge the funding gap.
With this nonsovereign-backed financing project, AIIB’s three-year captive VC investment program aims to drive and support early-stage companies across AIIB members to innovate and adopt new technologies. It also aims to create new business models that play a catalytic role in the promotion of green and tech-enabled infrastructure through small-scale VC funds.
“This is the first time since its founding that AIIB is entering the Asian venture capital market,” said AIIB Director General, Banking Department (Region 1), Dongik Lee. “The VC investment space is characterized by fast transaction speed, a smaller average ticket size and a unique risk-return profile. The VC Program will help AIIB build strategic partnerships and diversify its equity portfolio by partnering geographically with reputable and seasoned VC fund managers.”
AIIB’s Jea Young Huh, Principal Investment Officer, Private Equity, added that the VC program adopts a portfolio-driven approach to mitigate risk through diversification and a rigorous cherry-picked selection of VC fund managers.
“This way, AIIB has the dual role of a facilitator and an influencer in accelerating the adoption of innovations in promoting sustainable infrastructure,” said Huh. “The initial target portfolio will comprise approximately 12-15 VC funds to create a well-diversified VC portfolio which extends AIIB mandate and thematic priorities.”
As such, AIIB’s VC program champions both the Bank’s Infrastructure for Tomorrow mandate, with an emphasis on technology as a core competitive advantage, and the Private Capital Mobilization thematic priority, as outlined in the Bank’s Corporate Strategy.
AIIB's Environmental and Social Policy (ESP), Environmental and Social Standard and Environmental and Social Exclusion List are applicable to this VC Program. For each VC fund, the Environmental and Social Management System which details the selection, appraisal, approval and monitoring of investee companies, will align with AIIB’s ESP.
More information about the project can be found here.
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 106 approved members worldwide. We are capitalized at USD100 billion and Triple-A-rated by the major international credit rating agencies. Collaborating with partners, AIIB meets clients’ needs by unlocking new capital and investing in infrastructure that is green, technology-enabled and promotes regional connectivity.
