The International Finance Corporation (IFC), the private arm of the World Bank, is increasing its exposure in Myanmar. It is looking to inject $200 million, in the form of debt financing, to Myanmar Industrial Port in central Yangon.
In its third disclosed investment proposal in the region in less than six months, the project financing will also count as IFC’s first investment in transport infrastructure.
The financing is composed of $40 million as loan, $40 million as convertible C loan and $120 million in parallel loans, according to IFC’s investment disclosure.
The funding will be used to modernise the port and help unlock its potential in global maritime trade.
“Significant long-term US dollar financing is not currently easily available in Myanmar. IFC’s proposed investment is to provide long term funding, which is in line with the long term nature of the assets of the company,” it said, in its filing.
Besides, IFC’s backing will also encourage more private players and lenders to finance the project.
Myanma Annawa A Shin Group Co Ltd, which operates the port, is promoted by international shipping veteran Captain U Ko Ko Htoo who holds 50 per cent stake in the company. The remaining stake is held by his family members (40% by his wife, Daw Sandar Aung and 10 per cent by son U Min Thiha Htoo). U Ko Ko Htoo has been operating the container port since 2003.
The company has been operating the port for twelve years and has handled freight of about 278,000 twenty-foot equivalent units for the fiscal year ending March 2015. The port sits on 185 acres and handles 5,000 containers per day.
Apart from encouraging other players to invest in the country’s infrastructure, IFC’s backing will help the company to manage potential regulatory risks as also improve its corporate governance standards.
The port, located at the Ahlone township on the Strand road, was previously a shipyard. It is located within the port area on the Yangon River in central Yangon city with good access to land transportation.
IFC has previously extended a $25-million loan to Myanmar’s largest private retail group, City Mart Holding Company Limited (CMHL), to finance its expansion in the country.
IFC has also proposed to invest invest $40 million in 225 megawatt combined cycle gas turbine power plant at Mandalay. The investment will be in form of debt financing for the power plant, which will be built by a consortium of companies including, the Singapore-based Sembcorp Utilities Pte Ltd and MMID Utilities Pte Ltd, according to the project details stated at the website of IFC.