MOBILIST makes catalytic equity investment in infrastructure debt securitisation transaction sponsored by Singapore-based Bayfront Infrastructure Management
The UK government’s Mobilising Institutional Capital Through Listed Product Structures (MOBILIST) programme will make an anchor equity investment in an infrastructure asset-backed securitisation transaction.
The transaction, sponsored by Bayfront Infrastructure Management, represents a seminal equity investment by a development finance actor in a transaction to mobilise capital at scale to support climate transition.
It will see the listing of securitised notes on the Singapore Exchange (SGX Group), a MOBILIST partner exchange, to catalyse US$410.3 million of institutional investment in strategic infrastructure projects across Asia, the Middle East and Africa.
MOBILIST is a flagship UK public markets programme. It works by competitively sourcing and selecting emerging and frontier market investment products that support the climate transition and Sustainable Development Goals (SDGs) and channelling investments towards them.
By providing direct investment, technical assistance, advisory services, and/or enhanced visibility through the UK Government’s platforms, MOBILIST supports new scalable, commercially viable and replicable financial products that support development objectives to list on public markets.
MOBILIST is a key part of the UK government’s British Investment Partnerships (BIP) offer.
13 September 2023, Singapore/London. The UK government’s MOBILIST programme will make an anchor equity investment in an infrastructure asset-backed securitisation transaction expected to catalyse over US$410 million of institutional investment in strategic infrastructure projects across Asia.
MOBILIST is investing in preference shares in Bayfront Infrastructure Capital IV Pte. Ltd. (BIC IV), the fourth infrastructure asset-backed securities transaction sponsored by Bayfront Infrastructure Management (Bayfront). Bayfront seeks to address the infrastructure financing gap in the Asia Pacific region by mobilising institutional capital for project and infrastructure debt through establishing sustainable, listed asset-backed securities as an asset class.
MOBILIST committed an anchor investment of up to US$20.4m in the Preference Shares in BIC IV and received a final allocation of US$5.0m (equivalent to 5.0 million Preference Shares), given investors’ robust demand, which resulted in strong oversubscription for the Notes.
The transaction involves the securitisation of a portfolio of project and infrastructure loans and bonds into infrastructure asset-backed securities, also called “notes”, to be listed on the Singapore Exchange (SGX Group), a MOBILIST partner exchange since 2022. The Private Infrastructure Development Group’s (PIDG) guarantee arm, GuarantCo, will provide a guarantee linked to the Class D notes, which will be subscribed to by a global asset management company.
The Rt Hon James Cleverly MP, Secretary of State for Foreign, Commonwealth and Development Affairs, UK Government, said: “By partnering with Bayfront, the UK is helping mobilise institutional capital to address the infrastructure financing gap in developing countries and enabling financial institutions to recycle capital into more sustainable climate infrastructure. MOBILIST’s work to enable risk transfer through public markets is a powerful demonstration as to how development finance can unlock capital at scale. This transaction is an important milestone in the UK’s new Strategic Partnership with Singapore. We look forward to working with Bayfront and other like-minded leaders on the development of sustainable financing solutions for the Asia region.”
Investments in the equity tranche of a securitisation vehicle are critical to attracting other investors by ensuring that the listed debt instruments the vehicle issues can attract appropriate credit ratings.
Nicholas Tan, CEO of Bayfront, reiterated that securitisation transactions can accelerate the private sector’s contribution to climate finance. “This innovative investment delivers significant additionality, allowing Bayfront to enhance the efficiency and mobilisation factor of our equity capital to crowd-in institutional participation. Through the frequent issuance of infrastructure asset-backed securities, Bayfront has demonstrated our commitment to address investors’ growing appetite for sustainable infrastructure projects.”
Ross Ferguson, FCDO MOBILIST Programme Lead, said: “MOBILIST’s stake in BICIV represents a seminal equity investment by a development finance actor in a transaction of this nature and sets a strong precedent for other development finance actors. It demonstrates that investments in the equity tranche of a debt securitisation vehicle are commercially sound and can have a significant multiplier effect by enabling both commercial banks and multilateral development banks (MDBs) to accelerate the rate at which they can recycle capital.”
Ferguson said the transaction provides valuable insights for MDBs considering securitisation to respond to growing calls for them to increase their lending capacity. “It shows there is sufficient investor appetite for securitised notes backed by assets similar to those held on MDB balance sheets. It demonstrates how public money can be deployed on a commercial basis, returnable to the taxpayer, and the great potential for MDBs to use securitisation – as well as public markets – as powerful instruments to transfer risk from their balance sheets in a way that builds new markets and to increase the amount of capital these lenders can deploy every year and, therefore, their developmental impact.”
Bayfront Infrastructure Management is a Singapore-based platform with a mandate to invest in and distribute project and infrastructure loans in Asia Pacific and Middle East regions.
It was established in 2019 in connection with the Infrastructure Take-Out Facility initiative sponsored by the Government of Singapore, which was designed for institutional investors to access Asia Pacific infrastructure debt. It seeks to address the infrastructure financing gap in the Asia-Pacific region by facilitating the mobilisation of private institutional capital into the infrastructure financing market.
Bayfront’s business model is to acquire infrastructure debt, as well as structure, execute and manage securitisations (through its Infrastructure Asset-Backed Securities product) or other forms of distribution to institutional investors.
Bayfront is capitalised at US$1.98 billion, comprising US$180 million in equity and US$1.8 billion in debt issuance capacity. The equity capital is committed by Clifford Capital Holdings and the Asian Infrastructure Investment Bank on a 70/30 basis, respectively. Debt instruments issued by Bayfront to acquire and warehouse loans from banks benefits from a guarantee provided by the Government of Singapore.
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Angela Campbell-Noë / Jonathan Yeoh