US$500M Fund to Invest in Urban Development and Infrastructure Projects in Emerging Asia
By Accommodation Times Bureau
Surbana Jurong Capital, the newly established financial services arm of Surbana Jurong and Mitsubishi Corporation on September 14 signed an agreement to set up a fund management company (FMC). The FMC will be a 50:50 joint venture between the two companies and will be jointly managed by both partners.
The partners will each contribute up to US$250 million (Rs 1.750 crore estimated) to seed the Fund, and the FMC will also raise and manage funds from other accredited or institutional third-party investors.
The FMC will set up an Investment Fund (Fund) to invest in urban development projects in emerging Asia, primarily in Myanmar, Vietnam, Philippines, Indonesia, India and Sri Lanka. Such projects may include transit-oriented developments (TOD) such as aviation or rail-related developments, affordable housing, as well as other urban-related infrastructure.
The partners will each contribute up to US$250 million to seed the Fund, and the FMC will also raise and manage funds from other accredited or institutional third-party investors.
According to the Asian Development Bank’s (ADB) estimates, developing Asia will need to invest at least US$1.7 trillion per year in infrastructure until 2030 to maintain its growth momentum. However, there remains a huge gap between the demand for such infrastructure and the region’s access to financing.
Wong Heang Fine, Group Chief Executive Officer of Surbana Jurong, said, “Emerging countries in Asia continue to see rapid economic and population growth, which drives the demand for urban infrastructure projects including transit-oriented developments and affordable housing. Jurong and Mitsubishi Corporation’s new FMC will provide that capital bridge. Our JV will tap both partners’ know-how across financing and investing, as well as technical and risk analysis to deliver sustainable returns. This JV is also timely, as Singapore positions itself as the regional infrastructure hub.”
The FMC will seek out commercially-viable urban infrastructure projects which are in an advanced feasibility stage or in the early phases of construction, and provide equity investment to support such projects. Qualifying projects will need to meet sustainable environmental, social and corporate governance metrics. Institutional investors seeking to participate in the sustainable growth of the region can, therefore, do so through the Fund.
The FMC will leverage both partners’ unique strengths to deliver optimum long-term risk-adjusted returns for the Fund. Surbana Jurong, as one of the largest Asia-based urban and infrastructure consultancies, has direct exposure to project opportunities in the region.