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Multi-Country: ISQ Growth Markets Infrastructure Fund

SUMMARY

STATUS
Approved
MEMBER
Multicountry
SECTOR
Multi-sector
E&S CATEGORY
FI
PROJECT NUMBER
000396

FINANCING

APPROVED FUNDING
USD150 million
FINANCING TYPE
Nonsovereign

TIMELINE

CONCEPT REVIEW
December 2020
FINANCING APPROVAL
January 28, 2021

OBJECTIVE

To mobilize private capital for sustainable infrastructure development and enhance cross-border connectivity in growth countries in Asia and Latin America, capturing a market risk-adjusted return.

DESCRIPTION

ISQ Growth Markets Infrastructure Fund (the “Fund”) is a closed-end fund with a target size of USD2 billion. It is an extension of ISQ Global Infrastructure Fund III, due to the quality and quantity of investment opportunities in growth markets. The Fund aims to take advantage of the large number of investment opportunities in the infrastructure sector across growth markets in Asia and Latin America.

ENVIRONMENTAL AND SOCIAL INFORMATION

AIIB’s Environmental and Social Policy (ESP) is applicable to this project. The project has been placed in Category FI, because the financing structure involves the provision of funds through a financial intermediary (the Fund), whereby AIIB delegates to the Fund Manager the decision-making on the use of AIIB’s proceeds for further investing in accordance with the conditions in the Project’s legal documentation to be agreed with the Fund Manager in the form of eligibility criteria and investment guidelines, and applied through an Environmental, Social and Governance System (ESGS) which is to be used as the Project’s Environmental and Social Management System (ESMS).

The Fund Manager’s ESGS shall include screening, categorizing, appraisal, contracting and monitoring of investments supported by AIIB in accordance with the ESP, the Environmental and Social Exclusion List, regulatory requirements in the jurisdictions of operation and, where applicable, the AIIB Environmental and Social Standards (ESS). As per this ESGS, the Fund Manager (i) assesses and quantifies the ESG risks and impacts of potential investees against the applicable ESG regulatory requirements in their jurisdiction of operation and good international industry practices, (ii) defines measures to align their performance with the same, (iii) identifies and enhances ESG-value addition opportunities, (iv) monitors and assesses ESG performance during the investment holding period and (v) reports regularly to the Limited Partners and external stakeholders.

Coal mining, coal transportation and coal-fired power plants, as well as infrastructure exclusively dedicated to support any of these activities will be excluded from eligibility for financing under the Project. For all investments supported by AIIB, the Fund will require the establishment of a portfolio company-level ESGS in accordance with the ESP and, where applicable, the ESS, including appropriate processes for timely disclosure of environmental and social (E&S) information, conduct of stakeholder engagement activities, and establishment of subproject-level Grievance Redress Mechanisms (GRMs) to address concerns and grievances from both project workers and project-affected people. The Fund Manager will monitor these aspects as part of its portfolio monitoring process.

The Fund Manager will be required to periodically disclose the names, locations and sectors of portfolio companies that are being supported by AIIB’s financing, subject to regulatory constraints and market sensitivities. Furthermore, the Fund Manager will be required to create an external communication mechanism to address views of affected people, enquiries or concerns regarding its own E&S processes and outcomes as well as E&S impacts and performance of the portfolio companies invested by the Fund. AIIB will further review and validate the Fund Manager’s ESGS and conduct a prior E&S review of the initial investments to be financed using AIIB funds. Subsequently, AIIB will conduct prior review of investments presenting significant E&S risk, including all Category A investments and Category B investments determined to potentially induce a) involuntary resettlement, b) risk of adverse impacts on Indigenous Peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural resources or d) significant Occupational Health and Safety risks, and will receive an annual E&S monitoring report on the E&S performance of all AIIB-supported investments. AIIB will conduct regular monitoring of the Fund’s activities, including visits to selected investments.

PROJECT TEAM LEADER

Thomas Walenta

Senior Investment Officer

thomas.walenta@aiib.org

 

Jingyi Zhang

Investment Officer

jingyi.zhang@aiib.org

IMPLEMENTING ENTITY

Andreas Moon

I Squared Capital Advisors (US) LLC Managing Director,
Head of Investor Relations

andreas.moon@isquaredcapital.com

PROJECT DOCUMENTS

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