International Finance Corporation (IFC) is considering putting in $125 million as anchor investment into two third-party debt platforms that will invest in infrastructure projects alongside the World Bank arm.
The plan is part of efforts to mobilise $1 billion of private sector third-party capital, in addition to IFC’s investments, the private-sector lending arm of the World Bank said in a disclosure.
Each vehicle will be managed by a third-party asset manager. IFC is looking to invest in two vehicles–a fund to be established by Eastspring Investments and a second by another multinational insurance group it didn’t name.
IFC will make the investment in the form of subordinated debt or equity in each vehicle, an unfunded portfolio guarantee and/or financial instruments that synthetically replicate such structures, it said in the disclosure.
The initiative is being conducted under the IFC’s Managed Co-Lending Portfolio Program (MCPP). IFC said each vehicle will become an MCPP investor and that it will conduct all investment origination and supervision under this initiative.
Under MCPP, IFC creates loan portfolios for third-party investors based on pre-agreed eligibility criteria. All investments made by the vehicles will be in IFC originated senior loans on the same terms and conditions as with IFC’s investment for its own account.
The programme could ultimately facilitate additional third-party capital of $5 billion, it said.
IFC is an active private equity-style investor in India and also backs companies through debt funding. It is increasingly focusing on funding to infrastructure and renewable energy projects in the country.
In October 2014, IFC committed up to $90 million of equity investment in a Singapore-based holding company of private equity firm I Squared Capital to acquire operating road assets in India. I Squared has also been increasing its exposure to India’s infrastructure sector over the past year or so.