Hong Kong’s sovereign wealth fund, the Exchange Fund, has announced that it intends to invest in infrastructure.
Deputy chief executive Eddie Yue made the announcement on the Hong Kong Monetary Authority’s (HKMA) website on Tuesday.
The new allocation will form part of the fund’s long-term growth portfolio.
The fund, which is managed by HKMA, has previously concentrated its investment in equities and bonds. Its primary role is to support the exchange value of the Hong Kong dollar.
Total assets of the fund rose to HKD3.9trn (€416bn) at the end of June.
Yue also heads Hong Kong’s Infrastructure Financing Facilitation Office (IFFO), which has been set up to coordinate financing of projects in infrastructure, including China’s ‘One Belt, One Road’ initiative.
He said the decision to invest in infrastructure was made after in-depth research and what he called “concept crystallisation” on the IFFO platform.
“There has been good progress so far in our search for suitable investment projects, with some projects close to fruition. I look forward to sharing with you some good news shortly,” he said.
Yue added that the Exchange Fund is always prudent when making investments, with priority given to jurisdictions offering proper governance and an environmental protection framework.
“We will seek to partner with like-minded, world-class investors to give full play to our respective professional expertise,” he said.
A number of large private equity fund managers are ready to invest in, or have already committed actual funds to various infrastructure projects, he said
Since its establishment in 2016, the IFFO has brought together numerous sovereign wealth funds, international development agencies, pension funds, insurance companies and other major investors, he added.
Globally, he noted, investment of more than US$49trn would be required for investment development worldwide from 2016 to 2030.
HKMA also announced that it had committed US$1bn to what is known as a Managed Co-Lending Portfolio Programme (MCPP) debt mobilisation platform for emerging markets, run by the International Finance Corporation (IFC), part of the World Bank Group.
Through the scheme, the HKMA will support IFC in financing projects across more than 100 countries in infrastructure, telecoms, manufacturing, agri-business and services.
Norman Chan, HKMA’s chief executive, said the MCPP platform provides a “useful platform” through which the HKMA can broaden its investment opportunities in the credit market.
The IFFO would continue to act as a catalyst in pooling capital for infrastructure investments in emerging markets, he said.
Last year, HKMA’s Exchange Fund made its first offshore property deal, investing AUD350m in Lendlease’s major Barangaroo development in Sydney.
In August last year, it bought a 49% stake in Salesforce Tower on New York’s Sixth Avenue from Ivanhoé Cambridge and Callahan Capital Partners for US$1.15bn.