ImpactAlpha, March 7 – Health facilities, sanitation, transit and energy infrastructure in many emerging markets are starved for debt capital to finance new projects.
“There are very few infrastructure debt funds that are focused exclusively on emerging markets,” said Victoria Miles of ImpactA Global, a U.K.-based investment advisory firm.
Mainstream banks deem the markets too risky, and many projects are too small for large private infrastructure investors.
The women-led firm is building out a private debt strategy for infrastructure projects of less than $300 million. “This middle market has been left a little bit orphaned,” explained Miles.
ImpactA will look to contribute about $15 million to $30 million to each projects it backs.
The firm’s first investor is London-based money management firm Legal & General Capital
ImpactA expects to invest alongside export credit agencies and development finance institutions, whose mandates are to invest in markets and sectors underserved by private capital. The firm would come in as a market-rate investor behind credit guarantees, or first-loss or subsidized capital.
“We’re hoping to be catalytic in the kind of structures and partnerships we’re willing to contemplate, and through our willingness to come up with more innovative risk structures,” explained Miles.
Recent market volatility in many emerging markets has deterred private capital. “What we feel is that infrastructure credit is the least risky way to get exposure in emerging markets,” she said. “We’d love to see a broader willingness in the market to take structured risk, especially in some of the low-rated jurisdictions.”
As for the impact, she added, ImpactA is looking in markets where school attendance is affected by poor transit options, health is affected by urban pollution and unclean water, and life-expectancy is affected by inadequate health services.
“The impact angle is highly compelling,” Miles said. “These projects speak for themselves.”