Sir Danny Alexander’s AIIB message to corporates: “We want to hear from you”

Sir Danny Alexander’s AIIB message to corporates: “We want to hear from you”

26/10/17

Luke Foddy

Sir Danny Alexander gave a keynote speech at Asia House on infrastructure investment opportunities.                                                                                         

Sir Danny Alexander, Vice President and Corporate Secretary of the Asian Infrastructure Investment Bank (AIIB), gave a keynote speech at Asia House today on private sector opportunities with the AIIB.

The overriding message conveyed by Sir Danny was that the AIIB is actively seeking partnership opportunities with the private sector.

More than 80 countries have now joined the AIIB, which focuses on funding infrastructure projects aimed at improving trade and connectivity in Asia and beyond.

“All these countries have come together, pooled resources, and created an institution with US$100bn of capital,” said Sir Danny, who served as Chief Secretary to the Treasury under the UK’s coalition government, 2010-2015.

Speaking as part of an Asia House conference, Private Sector Opportunities with the AIIB, Sir Danny outlined the AIIB’s current priorities.

The first is funding sustainable projects, he said. “We see an important role for the AIIB in financing sustainable infrastructure such as renewable energy, sustainable cities and other projects that support that objective.”

The second priority for the AIIB is improving cross-country connectivity through the projects it supports, both within Asia to bring countries closer together, but also between Asia and the rest of the world.

The third priority, Sir Danny explained, is mobilising private sector capital, “and that is what I want to focus on today,” he said.

Funding challenge

 The disparity between required capital and AIIB funds is significant, and the private sector is vital for the bank’s forward momentum.

“In Asia, the challenge is huge,” Sir Danny said. “The estimated annual infrastructure funding needs in developing and emerging Asia is US $1.7trn per year, which far exceeds the capacity of multilateral development banks and public funds in member countries.

“We cannot bridge the gap without drawing in much greater amounts of private sector capital.”

However, despite vast amounts of private capital available, the private sector has not been forthcoming with investment, Sir Danny said, outlining “barriers” such as regulation, policy issues and blockages within specific financial instruments.

Crowding in

 “The AIIB would like to become one of the go-to banks for providing infrastructure financing solutions in and to client countries,” Sir Danny said. “We’d like to be a leading institution to crowd-in private capital for infrastructure investment.

“Ultimately, we want to be in a position where the AIIB comes into a market or sector, and when we do so create a deal flow and crowd in private finance.”

Sir Danny highlighted how the AIIB is still in “start-up phase”, focusing on building capacity.

“Right now, we are focused on partnering and doing deals,” he said.

“Get in touch”

“As part of this, we are interested in speaking to potential partner organisations, so if you have areas or ideas where you would like to work with us, please let me know today or get in touch after today’s event.”

The keynote speech kicked off an insightful conference, which included a panel of leading professionals from infrastructure and finance.

Matt Cavanagh, Director of Group Government Relations, Prudential; Daniel Hanna, Global Head of Public Sector and Development Organisations, Standard Chartered Bank; Gregory Hodkinson, Chairman, Arup; and David Sayer, Chairman High Growth Markets, KPMG UK LLP, took part in a wide-ranging discussion, chaired by Asia House Chief Executive, Michael Lawrence.

Watch Sir Danny Alexander’s keynote speech at Asia House here