Singapore/London – 13 September 2023: In order to catalyse over US$410 million of institutional investment in strategic infrastructure projects across Asia, the UK government’s MOBILIST programme will make an anchor equity investment in an infrastructure asset-backed securitisation transaction.
MOBILIST is investing in preference shares in Bayfront Infrastructure Capital IV Pte. Ltd. (BIC IV), the fourth infrastructure asset-backed securities transaction sponsored by Bayfront Infrastructure Management (Bayfront). Bayfront seeks to address the infrastructure financing gap in the Asia Pacific region by mobilising institutional capital for project and infrastructure debt through establishing sustainable, listed asset-backed securities as an asset class.
The transaction involves the securitisation of a portfolio of project and infrastructure loans and bonds into infrastructure asset-backed securities, also called “notes”, to be listed on SGX, a MOBILIST partner exchange since 2022. The Private Infrastructure Development Group’s (PIDG) guarantee arm, GuarantCo, will provide a guarantee linked to the Class D notes, which will be subscribed to by a global asset management company.
MOBILIST has committed an anchor investment of up to US$20.4m in the Preference Shares in BIC IV and received a final allocation of US$5.0m (equivalent to 5.0 million Preference Shares), given investors’ robust demand which resulted in strong oversubscription for the Notes.
Rt Hon James Cleverly MP, Secretary of State for Foreign, Commonwealth and Development Affairs, UK Government said: “By partnering with Bayfront, the UK is helping mobilise institutional capital to address the infrastructure financing gap in developing countries and enabling financial institutions to recycle capital into more sustainable climate infrastructure. MOBILIST’s work to enable risk transfer through public markets is a powerful demonstration as to how development finance can unlock capital at scale. This transaction is an important milestone in the UK’s new Strategic Partnership with Singapore. We look forward to working with Bayfront and other like-minded leaders on the development of sustainable financing solutions for the Asia region.”
Nicholas Tan, CEO of Bayfront, reiterated that securitisation transactions can accelerate the private sector’s contribution to climate finance. “This innovative investment delivers significant additionality, allowing Bayfront to enhance the efficiency and mobilisation factor of our equity capital to crowd-in institutional participation. Through the frequent issuance of infrastructure asset-backed securities, Bayfront has demonstrated our commitment to address investors’ growing appetite for sustainable infrastructure projects.”
Investments in the equity tranche of a securitisation vehicle are critical to attracting other investors by ensuring that the listed debt instruments the vehicle issues can attract appropriate credit ratings.
Ross Ferguson, FCDO MOBILIST Programme Lead, said: “MOBILIST’s stake in BICIV represents a seminal equity investment by a development finance actor in a transaction of this nature and sets a strong precedent for other development finance actors. It demonstrates that investments in the equity tranche of a debt securitisation vehicle are commercially sound and can have a significant multiplier effect by enabling both commercial banks and multilateral development banks (MDBs) to accelerate the rate at which they can recycle capital.”
Ferguson said the transaction provides valuable insights for MDBs considering securitisation to respond to growing calls for them to increase their lending capacity. “It shows there is sufficient investor appetite for securitised notes backed by assets similar to those held on MDB balance sheets. It demonstrates how public money can be deployed on a commercial basis, returnable to the taxpayer, and the great potential for MDBs to use securitisation – as well as public markets – as powerful instruments to transfer risk from their balance sheets in a way that builds new markets and to increase the amount of capital these lenders can deploy every year and, therefore, their developmental impact.”