Multicountry: Aberdeen Standard Investcorp Infrastructure Partners

OBJECTIVE

1. To mobilize private capital investments for infrastructure in the MENA via a private equity fund.

2. To generate market risk-adjusted returns by partnering with a leading global fund manager.

DESCRIPTION

The fund will invest in social, urban and economic infrastructure in GCC countries and up to 15 percent of the fund can be allocated to the wider MENA countries. The Fund will target investments between USD 40 to 120 million and will take ownership stakes of between 10 and 100 percent, acquiring adequate governance rights. The term of the fund is 12-years, and the investment period is 5-years. AIIB has been approached to join the first close in Q1 of 2021.

ENVIRONMENTAL AND SOCIAL INFORMATION

AIIB’s Environmental and Social Policy, including relevant Environmental and Social Standards (ESSs) and the Environmental and Social Exclusion List (ESEL), applies to this Project. The project has been assigned category FI, as the financing structure involves providing funds to ASIIP, pursuant to which AIIB delegates to ASIIP the decision-making related to the use of AIIB funds. ASIIP’s Sustainability Management System (SMS) contains the Environmental and Social Management Systems including details of selection, appraisal, approval and monitoring of subprojects. The SMS is in accordance with AIIB’s Environmental and Social Policy (ESP) including the Environmental and Social Standards (ESSs) and the Environmental and Social Exclusion List (ESEL).

ASIIP will have an independent and dedicated team of professionals, including a dedicated ESG Officer, to evaluate and select appropriate sub-projects in the pipeline. Coal mining, coal transport and coal-fired power plants, as well as infrastructure services dedicated to supporting any of these activities, will be excluded. The team will conduct due diligence of the selected sub-projects and provide management support during implementation and monitoring. The ESG officer will implement the SMS, including supervision of ESG due diligence for each subproject, and will leverage existing joint venture partners’ capacity to conduct ESG training for the team. AIIB will conduct prior review of the first three subprojects and all category A sub-projects and higher-risk category B sub-projects to expedite ASIIP’s compliance with AIIB’s E&S requirements.

ASIIP refers to the Standard Life Aberdeen’s Environmental Management System (EMS), which is aligned with ISO14001:2015. The EMS highlights commitment to environmental protection, management of greenhouse gas emissions, prevention of other pollutants and compliance with all relevant legislation in every country of operation. ASIIP refers to other Standard Life Aberdeen ESG-related policies and statements, including on human rights, diversity and inclusion, modern slavery, global third-party code of conduct and others. AIIB has conducted due diligence to assess ASIIP’s (a) enhanced SMS with AIIB’s Environmental and Social Policy requirements on its application to a co-managed closed-end private equity fund, (b) experience in implementing the SMS, (c) investment team’s capacity to implement the SMS and related trainings undertaken and training plans and (d) current pipeline and potential E&S risks and impacts.

ASIIP’s ESG due diligence includes a review of the procuring authority’s engagements and consultations with stakeholders. Information will be required to be disclosed in a timely, accessible manner and in a form and language understandable to the affected people. ASIIP will disclose on its website the name, industry, location and relevant E&S documents of category A and category B sub-projects within 12 months from financial close.

The Fund will create an External Communication Mechanism (ECM) to receive feedback on their sustainability approach, SMS and ESG performances of their portfolio investments. The Fund will be required to ensure that the sub-projects conduct appropriate E&S disclosure and stakeholder engagement processes and establish subproject-level grievance redress mechanisms (“GRM”) to address concerns and grievances from both project workers and Project-affected People.

During project administration, AIIB will require submission of ESG toolkit, appraisal form, relevant E&S documentation, and quarterly E&S monitoring reports from the Fund in an agreed format providing an update on the implementation of the SMS, and a summary of the E&S performance of each sub-project. AIIB will conduct post-reviews of the selection and implementation of sub-projects as part of its regular supervision, comprising engagement with the Fund, potential site visits and detailed review of the E&S documentation of selected sub-projects.