ESR Group Limited‘s ARA, a Singaporean real asset fund manager, announced Monday it has entered into a partnership with the Export–Import Bank of China for the closing of a $1 billion infrastructure fund – China-ASEAN Investment Cooperation Fund1 II (CAF II).
The fund will invest in ASEAN countries across various infrastructure, energy resources including renewables, and information and communication technology (ICT) sub- sectors, with a strong focus on sustainability and environmental, social, and governance (ESG) standards, ESR said in a statement.
ARA Private Fund’s infrastructure arm, ARA Infrastructure, has also been appointed as investment adviser by the Export– Import Bank of China, the main anchor sponsor of the fund.
This follows Chinese Premier Li Keqiang’s speech at the 25th China-ASEAN Summit highlighting the support of major infrastructure and energy projects in ASEAN.
The Export-Import Bank of China, Gezhouba Group Overseas Investment Corporation, China Road & Bridge Corporation and ARA have together committed $1 billion to CAF II.
“Our move into the infrastructure and renewables business further strengthens our competitive edge as a fully integrated one-stop solution for our capital partners and customers,” said Jeffrey Shen and Stuart Gibson, ESR Co-Founders and Co-Chief Executive Officers.
“We are confident that the infrastructure fund is well-positioned to benefit from robust long-term macroeconomic trends in ASEAN including rising incomes, rapid urbanisation and favourable demographics,
“Alongside the focus on post-COVID economic recovery and growth, and various government investor-friendly policies to encourage infrastructure investment, the fund will contribute significantly to economic expansion and job creation across the region,” they said.
Export-Import Bank of China Vice President Chen Bin said dedicated to supporting the foreign trade sector, the Export-Import Bank of China takes ASEAN countries as key areas for business development.
“We have established business ties with ASEAN countries for more than 20 years and financed more than 200 projects in such sectors as power, transportation, water conservancy and industrial production,
“We hope CAF II can help enhance connectivity, trade and investment cooperation between China and ASEAN countries, so as to contribute to the economic cooperation and trade in the region,” he said.
Cited Asian Development Bank (ADB), ESR said developing Asia will require more than $26 trillion of investments between 2016 to 2030 ($1.7 trillion per year) in infrastructure to support economic growth, raise living standards and mitigate climate change impacts.
Of these funds, $14.7 trillion (56 percent of the total) will be needed for the transition of the energy sector to more renewable and efficient sources.
However, there remains a funding gap of $459 billion per year in the region.
“We are excited to have expanded into a new asset class and we have established a specialist infrastructure and renewables team, leveraging the resources across the group, to steer the business as we continue to accelerate our growth in size, scale and offerings,” said Moses Song, ARA Chief Executive Officer.
“With the fund’s focus on essential infrastructure and renewable assets, we are delighted to play a part in helping to build connectivity, economic, trade and investment cooperation in ASEAN, and to bridge any funding gap,
“In line with our focus on ESG, the fund will also adopt best-in-class sustainability practices and ESG standards to support the region’s energy transition and climate action,” he said.
According to the statement, the resilience of infrastructure assets during times of economic downturn has greatly raised the attractiveness of the asset class among investors.
Cited 2021 Preqin survey, it said 47 percent of global investors intend to increase their long-term allocation to the asset class.
Assets under management (AUM) for the sector is projected to grow at a rate of 16.6 percent compound annual growth rate (CAGR) from $86 billion to $1.87 trillion between 2021 to 2026, overtaking real estate to become the largest real asset class.
ESR is Asia Pacific (APAC)’s largest real asset manager powered by the new economy and the third largest listed real estate investment manager globally.
With over $140 billion in total assets under management (AUM), its fully integrated development and investment management platform extends across key APAC markets, including China, Japan, South Korea, Australia, Singapore, India, New Zealand and Southeast Asia, and also includes an expanding presence in Europe and the United States.
It provides a diverse range of real asset investment solutions and new economy real estate development opportunities across its private funds business, which allows capital partners and customers to capitalise on the most significant secular trends in APAC.