IFC plans investments in banks, infra projects

International Finance Corp., the private sector funding arm of the World Bank, plans to pump in more investments in the local financial and infrastructure sectors this 2012.

IFC country representative Jesse Ang said in an interview Friday night that these two sectors would continue to be attractive in the Philippines in terms of equity investment even if the local stock market was now trading at record highs.

“I think there’s still more we can do in the financial sector particularly with the government wanting to accelerate Basel 3 (implementation). That needs additional capital, particularly tier 1 capital,” Ang said. “But we also want to do infrastructure because we see a gap in infrastructure.”

Basel 3 refers to a more stringent global framework for measuring capital adequacy versus risk assets.

IFC has about $1 billion in investment exposure to the Philippines, making this its 10th-biggest portfolio globally. Half of this is in the power sector, including a minority stake in geothermal energy crown jewel Energy Development Corp.

The multilateral funding institution is keen on further increasing its equity exposure in banking and infrastructure, not necessarily limiting its option to publicly listed companies. “When we invested in Manila Water, they were not listed yet,” he said.

In any deal, especially in infrastructure projects, however, IFC can also participate as lender and financial adviser.

Given the opportunity, he said IFC could overshoot its annual budget. The all-time high investment made by IFC in a single year was in 2008 when it plowed in $564 million in the Philippines. Last year, its local deals reached only $186 million, lower than the usual annual budget of $300 million.

“But of course our business is not just lending. We’re doing advisory work,” Ang said, noting that IFC was currently working with the Development Bank of the Philippines to structure the Department of Public Works and Highways’ NAIA tollway project. There is also an existing project with Land Bank to help the Department of Agriculture.

In case of equity investments, Ang said IFC was looking at a long-term horizon.

“In Manila Water, we invested in 2004 and we’re still there. In EDC, in 2006 and we’re still there. In BDO, we invested in 2002 then reinvested in 2010 and put in a bigger amount,” he said.

In banking, IFC likewise has investments in Rizal Commercial Banking Corp. and Planters Development Bank.