The Asian Infrastructure Investment Bank ( AIIB ) has committed US$90 million to Aberdeen Standard Investcorp Infrastructure Partners’ ( ASIIP ) new regional fund, which will invest in sustainable infrastructure in the Gulf Cooperation Council ( GCC ) and the wider Middle East and North Africa ( MENA ) region.

ASIIP has also received a capital commitment from the Public Investment Fund ( PIF ) for up to 20% of the fund’s total size.

The fund will invest in social, urban and economic infrastructure in GCC countries and up to 15% of the fund can be allocated to the wider MENA countries. It targets investments of between US$40 million and US$120 million.

The term of the fund is 12 years, and the investment period is five years. AIIB has been approached to join the first close in the first quarter of 2021.

With environmental, social and governance ( ESG ) principles and the United Nations Sustainable Development Goals at the heart of its philosophy, the fund’s mission is to deliver solutions in health care, education, water, mobility and digital infrastructure that will benefit local communities and future generations.

The GCC needs to increase infrastructure investment urgently to accommodate a 30% increase in population and a gradual increase in urbanization. Given current fiscal pressures, attracting more private capital is the key to meeting this funding gap.

AIIB says its anchor investment will not only directly mobilize private capital the region needs by helping secure its first close, it will also provide a halo effect that will encourage other investors to contribute to the fund.

“This is AIIB’s first commitment to an infrastructure fund in the region, which enhances the bank’s exposure and contributes to the diversification of the bank’s existing portfolio,” AIIB director general ( banking ) Najeeb Haider says. “By partnering with a leading global fund manager, the investments will also allow AIIB to leverage co-investment opportunities to acquire relevant market knowledge and gradually build sector expertise. Investing in infrastructure is critical for supporting the region’s long-term economic growth. AIIB’s participation will catalyze interest from Asian institutional investors in the fund and unlock potential for the region’s infrastructure development.”

Michael Fallon, chairman of AIIP, adds: “With AIIB’s commitment, we will be able to contribute to the post-Covid-19 economic recovery in countries across the Middle East while generating value for our shareholders.”