The new head of the International Finance Corporation, the
World Bank’s private sector arm, has pledged to
redouble the institution’s focus on infrastructure
financing – including by bringing sovereign wealth
funds directly into transactions – to help combat what
he sees as an acute shortage of bankable deals in Latin America
and other emerging markets.
Jin-Yong Cai, who took over as CEO in October, told
LatinFinance in an interview that the multilateral was
in advanced talks with sovereign wealth funds (SWFs) to
co-invest in infrastructure and other projects – a
development that would advance existing cooperation between the
IFC and the state investors.
Cai said the IFC was looking to develop new approaches to
helping SWFs from Asia, Europe and the Gulf take stakes in
projects. "We can play a unique role in helping sovereign funds
co-invest in projects," he said, without elaborating on
projects or entities under consideration. "[SWFs] typically
have a longer term horizon and we can create vehicles to help
them diversify their investments."
The IFC has already raised $500 million for its Global
Infrastructure Fund, including $100 million from its own
balance sheet and $150 million from Azerbaijan’s
SWF, as well as significant contributions from other sovereign
wealth and pension funds.
Cai, a former partner at Goldman Sachs, said he would
prioritize the multilateral’s role as a catalyst
for private sector investment in infrastructure to tap a chunk
of the "trillion dollars sitting in investors’
hands waiting to be deployed" in Latin America.
The IFC should act more like an investment bank in "bringing
solutions to our clients," Cai said. "We’ve always
been more innovative than other international financial
institutions, but we were more like a commercial bank than an
investment bank. We want to be both," he said.
"Of all the things I feel the most important thing is [for the
IFC] to become more client-focused, to be in the middle to
create transactions for allocating the resources for
"We want to play a much bigger role in providing financing,"
Cai said. "We have a sizeable balance sheet and we want to use
our knowledge and our network to be a true catalyst and
dealmaker. We want to be the de-risk factor in
Cai said such a function would be especially important in
markets including Brazil’s, where "bankability of
transactions is very difficult" and has perpetuated
infrastructure bottlenecks. "In Brazil, we need to have clear
regulations in terms of large transactions," he said.
"Investors need certainty."
Cai, the first Chinese national to head a multilateral, also
emphasized the corporation’s role in developing
local capital markets. Since last July, it has issued a record
$500 million in local currency bonds, including a 390 million
peso ($10 million) so-called "Taino" bond in the Dominican
Republic – the first domestic placement by an
international triple-A rated issuer.
Over that same period the IFC invested $2.7 billion in core
infrastructure sectors such as power, transport, and water,
including nearly $1.3 billion mobilized from other