ESR's ARA joins China Exim Bank to close $1b infrastructure fund

ESR's ARA joins China Exim Bank to close $1b infrastructure fund

The announcement marks ESR Group’s first investment in the infrastructure sector

ESR Group’s ARA Asset Management, a Singaporean real asset fund manager, has partnered with the Export-Import Bank of China (China Exim Bank) for the final closing of Southeast Asia’s largest infrastructure fund, which now has $1 billion in equity commitments.

Backed by China Exim Bank as its anchor investor, the China-ASEAN Investment Cooperation Fund II (CAF II) is a quasi-sovereign equity fund under the Xi Jinping government, according to a release on Monday.

The US dollar-denominated offshore fund aims to invest in infrastructure, energy resources, and natural resources, including renewables in ASEAN countries with a focus on sustainability and ESG standards. 

Through its infrastructure arm ARA Infrastructure, also the fund’s investment advisor, ARA Private Fund is joining China’s state-owned engineering and construction enterprises Gezhouba Group Overseas Investment Corporation and China Road & Bridge Corporation to close the fund.

The announcement marks ESR Group’s first investment in an infrastructure fund.  

“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…” said Jeffrey Shen and Stuart Gibson, ESR co-founders and co-CEOs.

“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 added. 

“Dedicated to supporting the foreign trade sector, the Export-Import Bank of China takes ASEAN  countries as key areas for business development…” said Chen Bin, vice-president of China EXIM.

Established in 2009 under the leadership of Chinese Premier Wen Jiabao, CAF II is the second instalment of its predecessor fund with the ultimate goal to raise up to $10 billion.

The government-owned vehicle targets co-investment with strategic partners in both greenfield and brownfield projects with a typical investment size of $50 million to 150 million. Its preference for capital deployment includes ownership of minority stakes, while its strategy extends to equity, quasi equity, and other financial instruments.

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