International Finance Corp. plans wider exposure in Philippines

MANILA, Philippines — Fresh from its anchor investment in Ayala-led AC Energy’s green bonds, the International Finance Corp. (IFC) said it plans to widen its exposure investments in the country for climate-smart infrastructure and affordable housing in the near term. 

In an interview yesterday, Vivek Pathak, director of IFC’s East Asia and Pacific Department, said they plan to invest more in green infrastructure, particularly in logistics and power. 

At the same time, IFC is also interested in investing in firms and financial institutions that can spur the building of more affordable housing that are climate-friendly. 

Pathak was in the country to meet with several banks and firms for potential clients for green finance. He said these include other companies under the Ayala Group and “one major bank.” 

“So we are looking at several areas, we are looking at infrastructure, so that’s a big component. We are also looking at affordable housing,” he said. “At the same time taking to more and more banks because we want to get them to be more interested,” he said.

IFC, a member of the World Bank Group, is focused on making investments in the private sector. Around 68 percent of its porfolio is now dedicated to green finance and it wants to grow this significantly, Pathak said. 

It has so far provided $465 million in financing for climate smart projects in a little over a year. 

These include the recent investment of $75 million in the first-ever listed green bond issued by AC Energy Finance International Ltd. and guaranteed by AC Energy, the power arm of Ayala Corp; $150 million in Banco de Oro’s green bond issuance in December 2017; $90 million Mabuhay Bond to finance the capital expenditure program of Energy Development Corp. last year; and the $150 million investment in the green bond issued by China Bank last year. 

Pathak said IFC is now pushing for the growth of climate business and financing in the Philippines as some technologies like solar are now becoming increasingly at par with traditional technologies in terms of efficiency and cost. 

“We don’t have a cap (on the volume of investments for the Philippines). We are hoping we can do $500 million a year of green investments in the Philippines. But it will take time to get there because the market has to react. But I’m hoping in two year’s time we can get there,” he said. 

Among the longer-hatching investment endeavors of IFC in the country is the creation of a market and demand for more climate-resilient housing, Pathak said.

This, however, would take an enormous amount of work as it would entail working with the government on the creation of a building code for green houses and getting financial institutions to provide financing and insurance for such, he noted. 

IFC, he said, is working with the World Bank on this. 

“So we are trying to see how we can get in some money, maybe blend it into some commercial financing which would eventually enable people to build their houses to this level so it is resilient to floods and typhoons,” he said.