Sydney, Australia, November 11, 2021— Millions of people across the Pacific stand to benefit from a co-investment approach to overcoming a massive infrastructure gap that could also yield significant capital inflows, jobs and more sustainable economic growth.
A guide released today by the Pacific Islands Investment Forum (PIIF) and International Finance Corporation (IFC) identifies options for establishing a co-investment function that will help direct long-term capital into attractive projects, boosting investment in industries, services and infrastructure across the Pacific. The co-investment approach will enable PIIF – a regional network of 18 provident, superannuation, trust and sovereign wealth funds from 12 countries with approximately US$8 billion under management – to channel capital within the Pacific region and provide access to high quality cross border investments that would have been out of reach for most member states.
Co-Investment Options in Infrastructure: A Guide for Institutional Investors draws on global examples, including IFC's Managed Co-Lending Portfolio Program, detailing different ways long-term investors make collaboration and mobilization work in the international investment landscape. Once a platform is in place, it could facilitate new investment opportunities. The guide identifies six co-investment options, weighing up elements including level of control by investors, flexibility, and barriers to setting them up.
"Our members have an important shared objective: to channel their capital within the Pacific region, enabling economic development opportunities for member countries, in the spirit of improving regional collaboration," said PIIF Chairman and Samoa National Provident Fund Chief Executive Pauli Prince Suhren. "Investments in industries, services and infrastructure represent a huge opportunity for our members. There is a clear need for capital as well as a steady stream of opportunities, even more so in the wake of increased fiscal constraints due to the COVID-19 pandemic."
Pacific nations face many challenges in the delivery of essential infrastructure in sectors such as sustainable energy, health, transport, logistics and telecommunications. It's estimated that from 2016 through to 2030, US$46 billion in investment is needed to overcome the region's infrastructure deficit.
The release of this guide comes amid a growing recognition internationally of the need to reduce emissions and avert a climate disaster. Pacific nations are among those most at threat from harmful climate change. The co-investment model offers a conduit for sustainable investment in climate-smart infrastructure and an opportunity to crowd investors into green solutions.
"This vital guide comes at a time our work to mobilize long-term private capital is even more critical," said Thomas Jacobs, IFC Country Manager for Australia, New Zealand, Papua New Guinea and the Pacific Islands. "Amid the global shock caused by the pandemic, there has been a heavy human toll and economic impact on the Pacific region. Addressing the need for better infrastructure and helping to stimulate a sustainable economic recovery is crucial to helping people across the region overcome these setbacks and the profound challenge that comes from climate change."
Across the Pacific, investment fund members of PIIF play critical roles in financial systems. They strive for the best returns for their investors and their performance is of paramount importance to livelihoods and wellbeing of people across the region.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
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About PIIF
The Pacific Islands Investment Forum was established to provide an opportunity for dialogue and support for investment and co-investment by funds around the Pacific. It is an association of 18 members—including investment funds including provident, superannuation, sovereign, and trust funds—from 12 countries with approximately US$8 billion under management. IFC is supporting members of PIIF to explore co-investment opportunities for funds to invest in other countries' industries, services, and infrastructure across the Pacific.
Pacific Partnership
IFC's support for PIIF has been complemented by the support of the Australian and New Zealand governments under the Pacific Partnership. Australia, New Zealand and IFC are working together through the Partnership to stimulate private sector investment and reduce poverty in the Pacific.
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