Publication: Crowding-In Capital Attracts Institutional Investors to Emerging Market Infrastructure through Co-Lending Platform
Loading...
Published
2018-04
ISSN
Date
2018-09-06
Editor(s)
Abstract
Financing infrastructure in emerging markets is a critical global challenge for sustainable development. Through a new International Finance Corporation (IFC) program, private institutional investors can directly participate in the evolving infrastructure asset class in emerging markets. The program, IFC’s managed co-lending portfolio program for infrastructure, creates a structure that overcomes several hurdles that have inhibited the flow of private capital to emerging market infrastructure projects. It provides an innovative model to mobilize financing for development that combines financing from insurance companies, project origination and credit enhancement from IFC, and support from public sector donors.
Link to Data Set
Citation
“Lauridsen, Morten Lykke; Chastenay, Carl; Kurdyla, Michael. 2018. Crowding-In Capital Attracts Institutional Investors to Emerging Market Infrastructure through Co-Lending Platform. EMCompass,no. 53;. © International Finance Corporation. http://hdl.handle.net/10986/30379 License: CC BY-NC-ND 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication Financing Deep Tech(World Bank, Washington, DC, 2021-10)Deep tech companies - those built on advances in biotechnology, robotics, electronics, artificial intelligence, and other advanced technologies—aim to solve complex social and environmental challenges. Today the majority of deep tech companies are being launched in developed countries, yet the solutions they can provide are applicable globally. Many of these solutions are especially critical to emerging markets, as the intractable challenges of climate, health, and connectivity, among other issues, disproportionately affect these nations. Addressing these challenges is a strategic priority for development finance institutions and governments worldwide, so financing deep tech companies and boosting deep tech ecosystems in order to deliver new solutions globally is a pressing matter. Doing so, however, requires substantial capital and carries a higher degree of risk than ordinary venture investments. This note examines the process of financing a deep tech company, including the benefits and drawbacks of currently available types of financing, and suggests examples of promising but not yet widespread alternatives.Publication Banking on FinTech in Emerging Markets(International Finance Corporation, Washington, DC, 2022-01)Despite near-universal access to financial services in advanced economies, financial exclusion is stubbornly persistent in many emerging markets, leaving huge swaths of low-income populations unbanked or underbanked. FinTech companies, which apply innovative technologies to deliver such services in new ways, have begun to tap into the enormous unmet demand that this represents. These companies are starting to thrive in emerging markets, though regulatory issues, particularly weak consumer protection measures, remain to be resolved in many countries. If these can be overcome, and more progress toward universal access to digital infrastructure can be made, FinTechs will continue to scale and spread.Publication Sustainability-Linked Finance(International Finance Corporation, Washington, DC, 2022-01)Sustainability-linked finance is designed to incentivize the borrower’s achievement of environmental, social, or governance targets through pricing incentives. Launched in 2017, it has now become the fastest-growing sustainable finance instrument, with over $809 billion issued to date in sustainability-linked loans and bonds. Yet these instruments are still nascent in emerging markets, which represent only 5 percent of total issuance to date. This note shares examples of recent sustainability-linked financing, including several involving IFC in various roles, to highlight how investors can utilize these new instruments in emerging markets and mitigate greenwashing risksPublication Enabling Private Investment in 5G Connectivity in Emerging Markets(International Finance Corporation, Washington, DC, 2021-04)This note proposes a high-level framework to assess challenges and policy options to enabling private sector-led investment in 5G connectivity in emerging markets. 5G is the latest mobile network technology and it has the potential to provide high-speed Internet connectivity and enable digital transformation across multiple sectors of an economy. The proposed framework leverages industry data to articulate the digital divide and benchmark the enabling environment for 5G connectivity in emerging markets. The note concludes with recommendations on policy options and business strategies, drawing from early experiences in advanced markets and major opportunities and challenges in emerging markets.Publication Artificial Intelligence(International Finance Corporation, Washington, DC, 2019-09)The global race to fund, develop, and acquire artificial intelligence (AI) technologies and start-ups is intensifying, with commercial uses for AI proliferating in advanced and emerging economies alike. AI can increase gross domestic product (GDP) growth in both advanced countries and emerging markets. In energy, AI can optimize power transmission. In healthcare, diagnosis and drug discovery will benefit enormously from AI. In education it can improve learning environments and learning outcomes and can better prepare youth for transition to the workplace. In manufacturing, AI can help design better products in terms of functionality, quality, and cost, and improve predictive maintenance. AI can help extend credit and financial services to those who lack them. The potential impact of AI on transportation and logistics goes far beyond automation and road safety to span the entire logistics chain. Yet with the exceptions of China and India, emerging markets have received only a modest share of global investment in this advanced technology, despite the fact that they may benefit more from AI implementation than advanced economies.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Mobilizing Institutional Investments into Emerging Market Infrastructure(International Finance Corporation, Washington, DC, 2017-04)The infrastructure financing gap remains a critical global challenge for sustainable development. New thinking and innovative financial models are needed in order to mobilize more private capital to infrastructure investments. International Finance Corporation’s (IFC’s) new managed co-lending portfolio program for infrastructure seeks to address numerous infrastructure financing challenges that inhibit the flow of resources to emerging markets. The program provides an innovative model for mobilizing financing for infrastructure projects that combines financing from insurance companies, project origination and credit enhancement from IFC, and support from public sector donors.Publication Toward a Framework for Assessing Private vs Public Investment in Infrastructure(International Finance Corporation, Washington, DC, 2017-01)Significant additional resources from the private sector will be needed for infrastructure in emerging market countries if the Sustainable Development Goals are to be achieved. Close to 80 percent of all infrastructure investments are government funded in these countries, yet it is recognized that public sector investments alone will not be sufficient to bridge the infrastructure gap. Scaling up the role that private firms and investors play in infrastructure provision will require a better understanding of the advantages and disadvantages of public versus private provision, including the issues and incentives that need to be considered in order to find the right balance between the two.Publication The Role of Developing Country Firms in Infrastructure : New Data Confirm the Emergence of a New Class of Investors(World Bank, Washington, DC, 2008-06)Developing country investors have emerged as a major source of investment finance for infrastructure projects with private participation. This update of the article in 2006, shows that, indeed, during 1998-2006 these investors accounted for more of this finance in South Asia and East Asia and Pacific, and for more in transport across developing regions than did investors from developed countries. Even though the policy implications are not yet fully clear for policy makers, this development suggests a need to rethink the criteria used in selecting investors in schemes for private participation, which have been biased toward large international operators.Publication Institutional Investing(International Finance Corporation, Washington, DC, 2019-02)Achieving the sustainable development goals is estimated to require additional financing on the order of 2.6 trillion dollars in emerging markets and low-income countries in 2030. A substantial increase in private investment is required to close this financing gap. Fortunately, institutional investors - who control the magnitude of funds needed - increasingly see sustainable, long-term investing and allocations in infrastructure as intriguing prospects. These investors face challenges to realize these opportunities, however. The investor forum held at the 2018 G20 Buenos Aires Summit, which included some of the world’s largest investors, focused on solutions to these challenges. The resulting Buenos Aires call to action calls for a more regular dialogue with policy makers at the highest level and underlines the need to break away from the short-termism that plagues current investment strategies. It also highlights a series of concrete actions designed to increase the flow of sustainable long-term investments.Publication Capital Market Instruments to Mobilize Institutional Investors to Infrastructure and SME Financing in Emerging Market Economies(World Bank, Washington, DC; International Monetary Fund, Washington, DC; and OECD, Paris, 2015-12-01)This report seeks to identify key capital markets instruments that can help mobilize institutional investors to infrastructure and small and medium enterprises (SME) financing in emerging market economies (EMEs). EMEs face financing gaps in infrastructure and SMEs that if not addressed can stifle growth and affect shared prosperity. This report is structured as follows: this section explains the objective of this report and the scope of the work undertaken. Section two provides an overview of the size and importance of institutional investors in EMEs and their current portfolio allocation. Sections three and four analyze key capital markets instruments that might help to mobilize institutional investors in EMEs to infrastructure and SME financing, and their current use in AEs and EMEs. Section five explains the challenges affecting the development of capital markets instruments in EMEs. Section six provides an overview of the role of governments and multilateral development banks (MDBs). Section seven draws conclusions and offer recommendations about actions that EMEs will need to undertake to mobilize institutional investors to infrastructure and SME financing.
Users also downloaded
Showing related downloaded files
Publication Mongolia Country Climate and Development Report(Washington, DC: World Bank, 2024-10-22)Mongolia’s development prospects are uniquely challenged by both the impacts of climate change and the global shift toward a low-carbon economy. The country’s efforts toward decarbonization pose significant challenges given the structurally high-emission intensity of its economy. While challenging, climate action also presents Mongolia with opportunities to achieve important development benefits. The effects of climate risks and the shift away from coal will have diverse impacts across different regions, communities, and socioeconomic levels. The report assesses the critical interconnections between Mongolia’s development ambitions and climate change action and identifies ways to transition to a more economically diversified, inclusive, and resilient development path. It highlights key climate and transition risks affecting Mongolia’s future development and presents a pathway to enhance climate mitigation and adaptation. The report also makes a case for strengthening policies to enhance resilience to climate change and ensure a just transition, particularly for the most vulnerable. The report is structured as follows: section 1 gives introduction. Section 2 delves into the linkages between development and climate in Mongolia and presents model-based findings on the economic and poverty impacts of climate change under different scenarios. Section 3 covers four in-depth sectoral analyses. The first two mainly focus on adaptation to climate change in the agriculture and water sectors. The third considers prospects for the extraction sector, while the fourth sectoral analysis focuses on decarbonizing power and heat generation. Section 4 shifts the focus to how the government can boost resilience for climate-vulnerable populations. Section 5 outlines options for mobilizing private and public financing and private investments to support the green transition. Section 6 examines the existing institutional and governance structure for climate action and presents recommendations to improve its effectiveness, and section 7 concludes with a framework for prioritizing the policy actions outlined in this report.Publication Comoros Country Climate and Development Report(Washington, DC: World Bank, 2025-06-18)The Union of the Comoros (The Comoros) has significant vulnerability to climate change-related risks but has considerable opportunities to strengthen preparedness and resilience against these challenges. According to the Notre Dame Global Adaptation Index, the Comoros is the 29th-most vulnerable country to climate change and the 163rd most ready to adapt (out of 191). The Comoros archipelago is exposed to many natural hazards that adversely affect the country’s natural capital, people, and physical infrastructure. In 2014, the economic cost of climate-related disasters was estimated at 5.7 million dollars annually, equivalent to 9.2 percent of Gross Domestic Product (GDP). Between 2018 and 2023, as many as 11 tropical depressions or cyclones impacted the country, with Cyclone Kenneth causing the greatest damage, equivalent to 14 percent of GDP, resulting in total economic growth falling from 3.6 percent in 2018 to 1.9 percent in 2019. More than 345,000 people (40 percent of the population) were affected by the cyclone, with 185,000 people experiencing severe impacts and 12,000 people displaced. However, there is an opportunity for the country to grow more robust and shock-responsive, and to establish pre-positioned funding mechanisms to enhance future crisis response efforts. For the Comoros, adaptation and climate-resilient development are the key climate change focus areas, with the country projected to face 836 million dollars 2050 in additional costs due to climate-related impacts. Current plans to adapt to the impacts of climate change in the Comoros include efforts to improve water management, strengthen coastal protection, and develop climate-smart agriculture practices. Given the country’s reliance on its natural resource base for economic growth and mobility, protection of these resources from climate change will be essential for promoting resilient growth and development. In addition to growing the adaptive capacity of the country’s natural resource sectors, strategic economic diversification will be important to help minimize future climate impacts, and development activities will need to be undertaken in such a way as to attract low-carbon co-benefits. The Union of the Comoros is committed to addressing climate change through its Nationally Determined Contribution (NDC) and national priorities. The country’s NDC (which was revised in 2021 for a ten-year horizon) sets ambitious targets, with a goal of reducing greenhouse gas emissions by 23 percent by 2030. The country also plans to significantly increase the share of renewable energy in its energy portfolio, reaching 33 MW by 2030. This will not only promote low-carbon development but also reduce the country’s dependency on imported oil and coal, which currently make up 95 percent of the energy mix. Additionally, the Comoros has declared its intention to increase CO2 removals by 47 percent by 2030, compared to BAU.Publication Kyrgyz Republic Country Climate and Development Report(Washington, DC: World Bank, 2025-11-03)This Country Climate and Development Report (CCDR) on the Kyrgyz Republic aims to support the country’s development goals amid a changing climate. The CCDR considers two policy scenarios up to 2050: the business-as-usual (BAU) and high-growth scenarios. As it quantifies the likely impacts of climate change on the Kyrgyz economy between now and 2050, the report highlights key government actions to best prepare for and adapt to climate impacts (referred to as “with adaptation” measures), with a particular focus on the time horizon up to 2030. The CCDR also outlines a path to net zero emissions by 2050 (referred to as “with mitigation” measures, “decarbonization,” or, simply, “net zero 2050”), highlighting associated development co-benefits.Publication Jobs in a Changing Climate: Insights from World Bank Group Country Climate and Development Reports Covering 93 Economies(Washington, DC: World Bank, 2025-11-05)The World Bank Group’s Country Climate and Development Reports (CCDRs) provide a crosscutting look at how countries’ development prospects, and the job opportunities they offer to their people, can be threatened by climate impacts and supported by climate policies. Climate change and policies affect jobs through impacts on productivity, energy and material efficiency, and physical, human, and natural capital. They can also transform employment opportunities, especially through complementary measures that help workers and firms adapt to and benefit from new technologies and production practices. Prepared by the World Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), CCDRs integrate country perspectives, climate science and economic modeling, private sector information, and policy analysis to assess how countries can successfully grow and develop their economies and create jobs despite increasing climate risks and while achieving their climate objectives and commitments. Each CCDR starts from the country’s development priorities, opportunities, and challenges, and is developed in close consultation with governments, businesses, and civil society, ensuring the recommendations reflect national priorities. By combining evidence on adaptation, resilience, and emissions pathways, CCDRs highlight where climate action can reinforce development and job creation, and where targeted policies are needed to manage risks and smooth labor market transitions. Taken together, these elements can help create local jobs, ensure economic transitions are just and inclusive, and equip workers and firms to navigate the disruptions and opportunities of a changing climate and changing technologies.Publication Guinea-Bissau Country Climate and Development Report(Washington, DC: World Bank, 2024-10-23)Guinea-Bissau is endowed with a wealth of natural resources, with the highest natural capital per capita in West Africa (US3,874 dollars per capita), which could be leveraged for sustainable and resilient growth. However, Guinea-Bissau faces significant development hurdles, such as high poverty rates, political instability, and economic challenges, including an over-reliance on cashew nuts. Rural poverty has increased, and the nation's infrastructure, education, and health care systems are underdeveloped. Climate change poses a severe threat, potentially impacting agriculture, fisheries, and infrastructure. Without adaptation, it could lead to a significant cut in real GDP per capita (minus 7.3 percent by 2050) and increase in poverty (with up to over 200,000 additional poor by 2050, that is, 5 percent of the expected population, in the worst scenario). The country's low greenhouse gas emissions are expected to rise, mainly due to agriculture and land-use changes, with deforestation being a major contributing factor. Although Guinea-Bissau is a low emitter, it has high mitigation ambitions, targeting a 30 percent reduction in greenhouse gas emissions by 2030. The Nationally Determined Contribution outlines significant climate actions, with initiatives focused on forest conservation, sustainable agriculture, and community development. However, the country's political instability, institutional weaknesses, and limited financial resources pose challenges to implementing these climate commitments, which depend heavily on external funding. The financial sector's underdevelopment and vulnerability to external shocks limit its ability to support green investments, though reforms could enhance resilience. Guinea-Bissau must consider its climate financing as development financing and vice-versa, engage the private sector, and integrate climate goals with national development plans to ensure a sustainable future. Concessional climate financing is vital due to the underdeveloped financial sector and the government’s limited borrowing capacity. Addressing Guinea-Bissau's vulnerability to climate change and its structural issues requires a cohesive approach that integrates development and climate strategies. This could involve improving governance, diversifying the economy, protecting natural capital, developing human capital, and investing in sustainable agriculture and infrastructure. The transition to a more sustainable and inclusive development pathway that supports economic growth is possible, but requires focusing on key strategic sectors, enhancing institutional capacity, and creating the conditions to mobilize finance. As a highly vulnerable country, there are myriad needs in the different sectors; however, to be more efficient and effective, Guinea-Bissau should prioritize actions in a few sectors, especially actions on biodiversity, agriculture, and social protection. Low carbon development, especially in energy and forestry sectors, could provide cost-efficient solutions and attract climate finance, including from the private sector, which will support the overall development agenda.