China and the World Bank have formed an infrastructure firm with an initial $500 million investment to help fund projects in Africa.
China Overseas Infrastructure Development and Investment Corporation Limited (COIDIC) will invest and manage projects from concept to feasibility studies. It will also follow up on financial close and take part in commercial operations.
Its shareholding comprises China-Africa Development Fund (CADFund) and China Gezhouba Group Overseas Investments. Others are China Telecom Global Limited Changjiang Survey, Planning, Design and Research (CISPDR), China ENFI Engineering Corporation and HCIG Energy Investment. It expects to rope in more partners next year.
Its deputy boss, Nicholas Mitsos, said they want to show that Chinese and entities from the West can team up to underwrite and construct essential public infrastructure in the developing world.
“After these projects are completed investors and lenders can exit profitably. Exit targets include pension funds, insurance companies and other institutional investors worldwide that will want de-risked long-dated infrastructure assets yielding more than government bonds,” Mr Mitsos said.
The joint investment firm intends to adopt a multilateral strategy for infrastructure finance like the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) also known as the BRICS Bank which have nearly 60 nations as shareholders.
The COIDIC plans to undertake infrastructure megaprojects in partnership with African and other international developers, equity investors, lenders, contractors and operators.
“One of the challenges for investment in African infrastructure is the scarcity of bankable projects. Our new company is aimed directly at meeting this challenge,” COIDIC’s chief executive, Dong Peng said.