Bloomberg — Multilateral development bank Corporacion Andina de Fomento intends to place new infrastructure funds in at least a half-dozen Latin American countries in a bid to lure private investment, including commitments from the region’s family offices and pension funds.
The lender plans investment vehicles in countries including Chile, Paraguay and Ecuador across the remainder of 2023 and into 2024, CAF President Sergio Diaz-Granados said in an interview. It has been managing such funds in Uruguay and Colombia for several years, he added.
In order to meet the United Nations’ sustainable development goals, Latin America and the Caribbean must spend $2.2 trillion by 2030 on new and existing projects ranging from water and sanitation efforts to highways and electricity grids, according to an Inter-American Development Bank report.
New CAF funds could mobilize roughly $6 billion to $8 billion of capital, adding that it could be used to invest in public-private partnerships to finance projects such as those for renewable energy or transportation.
“We need to mobilize more resources to PPP and different types of projects in Latin America and the Caribbean using the existing savings in the region,” said Diaz-Granados. “We have been sounding that out not only now but for the last six months, and there are 20 to 25 family offices in the region who are willing to invest.”
CAF manages one fund in Colombia and three in Uruguay for about $1.3 billion, a representative for CAF said in an email. The vehicles provide debt financing to infrastructure projects. Peru, the Dominican Republic and Costa Rica are other countries where CAF is considering placement of the funds.
Created in 1970, CAF’s shareholders are comprised of 19 countries and 13 commercial banks. Spain and Portugal are the only extra-regional nations which comprise part of the lender’s equity. More institutions based outside Latin America and Caribbean may be joining the lender.
“For the first time we will carry out very comprehensive agendas in countries such as the United Arab Emirates, Qatar, Korea, Japan, China in order to have some interaction and hold some talks,” said Diaz-Granados.
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