ESR Group’s s wholly-owned subsidiary ARA has entered into a partnership with the Export–Import Bank of China for the closing of a US$1
billion infrastructure fund, China-ASEAN Investment Cooperation Fund1 II (CAF II).
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.
The Export-Import Bank of China, Gezhouba Group Overseas Investment Corporation, China Road & Bridge Corporation and ARA have together committed US$1 billion to CAF II.
The fund will invest in ASEAN countries across various infrastructure, energy resources including renewables, and ICT subsectors, with a strong focus on sustainability and ESG standards.
Jeffrey Shen and Stuart Gibson, ESR Co-founders and Co-CEOs, said: “We are very proud of our ARA Infrastructure team for setting up the largest ASEAN-focused private infrastructure fund. We thank our partners and investors for their support and recognition of our Group’s sterling fund management expertise and track record as APAC’s largest real asset manager. 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. 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.”
According to the Asian Development Bank (ADB), developing Asia will require more than US$26 trillion of investments between 2016 to 2030 (US$1.7 trillion per year) in infrastructure to support economic growth, raise living standards and mitigate climate change impacts. Of these funds, USD$14.7 trillion (56% 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 US$459 billion per year in the region.
Moses Song, ARA CEO, said: “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. 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.”
The resilience of infrastructure assets during times of economic downturn has greatly raised the attractiveness of the asset class among investors. According to a 2021 Preqin survey, 47% 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% CAGR from US$86 billion to US$1.87 trillion between 2021 to 2026, overtaking real estate to become the largest real asset class.
