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Closing the financing gap: Infrastructure Project Bankability in Asia


Project bankability in Asia had been a key concern for investors in infrastructure for many years. Marsh & McLennan Companies’ Asia Pacific Risk Center estimates that between 55% – 65% of projects in Asia are not bankable without support from government or multilateral development banks. This report seeks to address the many challenges of project bankability in the region, by introducing a set of guidelines based on the combined expertise of Marsh & McLennan Companies’ operating companies: Guy Carpenter, Marsh, Mercer, and Oliver Wyman.

Key takeaways from the report include:

  1. In Asia, the public sector cannot fund the region’s future infrastructure needs on its own. Currently, the sector funds 90% of infrastructure development in the region. To meet the $26 trillion investment that is required in developing Asia by 2030, this status quo needs to change. 
  2. There is ample private capital available globally to meet this demand. Global institutional investors currently manage more than $50 trillion. Investments in infrastructure assets, with theoretically stable cash yields over time, can often be attractive even to investors with long-term liabilities. 
  3. In reality however, global investors have global alternatives, and infrastructure projects across much of Asia rarely rank as the most attractive option to deploy capital on a risk-adjusted basis – there is simply too much risk and uncertainty over investment returns. 
  4. The problem is not that these projects are outperformed other asset classes elsewhere in terms of levels of return – but that the majority of infrastructure projects in emerging markets (calculated at 55% - 65%) are fundamentally not bankable without government or multilateral development bank support. 
  5. Consistent adherence to the set of bankability guidelines outlined in this report, coupled with the deepening of national capital markets, could markedly change the outlook for infrastructure investment in the region by creating a pipeline of bankable projects. 
  6. The burden of responsibility to effect change sits with national governments across Asia. Many countries have begun making changes in line with the international best practice, but neither the volume nor the pace of change has been enough. 
  7. Institutional investors must also change, but are well-placed to do so at a faster rate than governments. Asia is a diverse region and investors that want to outperform the market over time will have to concertedly grow their local knowledge and capabilities. 
  8. The infrastructure financing gap is not new, but it continues to grow rapidly. The limited success of previous initiatives to transform the investment environment in the region must not dampen enthusiasm for action now. The chance to transform the economic prospects of nations and their citizens is too large a prize to ignore.