Philippine Daily Inquirer, 15 July 2013
By Paolo G. Montecillo
State pension fund Government Service Insurance System (GSIS) is eyeing increased investments in the infrastructure sector to improve returns as well as support the administrationâ€™s big-ticket projects.
â€śWe are looking at some of the public private partnerships (PPP),â€ť GSIS President and General Manager Robert G. Vergara said. â€śWe are looking at some of the bigger ones (to be developed jointly) with other groups,â€ť he added.
â€śWhere we are invited, and if it suits our return expectations, or if we are invited to join consortia where we feel we have value to add, we will participate,â€ť he said at a press conference Monday.
In particular, Vergara said the GSIS-led Philippine Investment Alliance for Infrastructure (Pinai) was in discussions with several groups to participate in the Light Rail Transit (LRT) Cavite Extension project.
The LRT extension, at an estimated cost of P60 billion, is the most expensive PPP in the governmentâ€™s pipeline.
This follows the recent signing of a joint venture deal between conglomerate Ayala Corp. and an investment vehicle backed by the GSIS for the development of wind power projects in northern Luzon.
The planned 200-megawatt wind farm in Ilocos Norte, to be developed by Ayala-led AC Energy Holdings Inc., Universal Philippines Wind Holdo IBV, and Pinai, will be the pension fundâ€™s first foray into infrastructure.Â Pinai intends to hold 32 percent of the wind power venture.
â€śWhatâ€™s exciting is that we have proven that the team managing the portfolio has a lot of value to add for infrastructure projects,â€ť Vergara said. The GSISâ€™ main partner in Pinai is Macquarie Infrastructure Philippines, a unit of multinational investment bank Macquarie group.
26 September 2012, The Philippine Star
by Prinz Magtulis
Managers of the countryâ€™s largest infrastructure fund is in talks with firms interested in bidding for public-private partnership (PPP) projects for possible tie-ups and collaborations, an official said yesterday.
â€śWe have few projects where we signed MOUs (memorandum of understanding) and term sheetsâ€¦, some of them are for PPPs,â€ť said Michael de Guzman, managing director of Macquarie Capital of the Australian-based Macquarie Group of Companies.
Macquarie, through its division Macquarie Infrastructure and Real Assets, manages the $625-million Philippine Investment Alliance Infrastructure (PINAI) which was set up together with the Asian Development Bank and the Government Service Insurance System last July.
De Guzman declined to name the projects where the fund will be invested, but said fund managers are specifically interested on â€śroads, rails, airports and schools.â€ť He also refused to name the companies where they signed agreements with.
â€śOnce projects are bid out, you will see there if the fund has invested something. So just wait,â€ť he told reporters on the sidelines of the Philippine Energy and Infrastructure Business Meeting.
â€śThe fund is willing to join consortiums as part of the bidder. We are also looking to partner with Philippine sponsors to play as supportive role in financing,â€ť De Guzman said.
Recently, GSIS president and general manager Robert Vergara said PINAI would likely bid for the operation and maintenance of the Light Rail Transit Authority (LRT) Line 1, which is currently at the pre-qualification stage.
The government targets to roll out â€” meaning to publish invitation to pre-qualify to bid â€” eight PPP projects this year after delays emanating from project reviews and change in leadership hit the program last year.
So far, only two PPP projects have been awarded since PPPâ€™s launch in November 2010 â€” the Daang-Hari-South Luzon Expressway link and the School Infrastructure Project. Those in the pipeline included the LRT lines 1 and 2 maintenance and extension, construction of the Ninoy Aquino International Airport Expressway Phase II, modernization of Philippine Orthopedic Center and Vaccine Self-Sufficiency Program Phase II
PPP Center executive director Cosette Canilao told reporters yesterday more PPP projects are underway by next year. â€śAs said earlier, we target 22 projects until next year. So this year, we plan to roll out eight, while the rest will be for 2013,â€ť she explained.
â€śWe are still developing new projects (for 2014 and beyond),â€ť she added.
De Guzman said PINAI is also looking at infrastructure undertakings outside PPP.
â€śWe are also okay with projects on other parts of Luzon, where local government play an important role. The Fund can provide up to 50 percent of equity (in those projects),â€ť he said.
07 September 2012, Business World Online
THE COUNTRY’S largest infrastructure fund is interested in investing in the Light Rail Transit Line 1 extension project, a public-private partnership (PPP) deal being pushed by the government.
Macquarie Infrastructure and Real Assets (MIRA) — the fund manager of the Philippine Investment Alliance for Infrastructure (PINAI) — is “looking at the LRT-1 extension project,” Government Service Insurance System (GSIS) President and General Manager Robert G. Vergara told reporters.
PINAI is a $625-million infrastructure fund bankrolled by the GSIS, the Asian Development Bank (ADB), Dutch pension asset manager Algemene Pensioen Groep (APG) and Australian financial services giant Macquarie Group.
The GSIS has contributed $400 million in the fund while ADB poured in $25 million. The balance is covered by the APG and Macquarie groups.
The Transportation department last month said the Macquarie Group was one of 25 parties that had bought bid documents for the LRT-1 project.
The P60-billion deal involves the extension of the railway by 11.7 kilometers to Cavite from Baclaran. It also includes the operation and maintenance of the railway and a program for continued system enhancements.
“MIRA is also looking for possible investments in the logistics sector, airports, among others,” Mr. Vergara told reporters.
31 July 2012, Asian Development Bank
MANILA, PHILIPPINES â€“ The Asian Development Bank (ADB) has approved an equity investment in a $625 million private equity fund focused exclusively on Philippine infrastructure projects â€“ the largest and first of its kind in the country and well-timed to capitalize on various public-private partnership opportunities in the Philippines.
ADBâ€™s investment in the Philippine Investment Alliance for Infrastructure (PINAI) fund is alongside commitments from Philippinesâ€™ state-owned pension fund Government Service Insurance System (GSIS), Dutch pension fund asset manager APG, and the Macquarie Group.
â€śApart from our direct equity investment, ADBâ€™s participation can help mobilize additional investment in the Philippines from top tier international partners, foster competition in domestic infrastructure finance, and establish a secondary market for well-performing infrastructure assets,â€ť said Philip Erquiaga, Director General for ADBâ€™s Private Sector Operations Department.
â€śWe are delighted to partner with GSIS, ADB and Macquarie and play a role in reducing the Philippine infrastructure funding gap. PINAI provides for an excellent investment opportunity and we expect it to enjoy an early mover advantage and to generate attractive risk-adjusted returns for our clients: pension funds in the Netherlands with combined assets of over â‚¬300 billion (around $367 billion),â€ť said Hans-Martin Aerts, Head of Infrastructure Asia at APG Asset Management in Hong Kong.
ADB hopes the success of the PINAI fund will also spur more private equity funds that will catalyze additional foreign capital into the country, and further the development of domestic capital markets.
â€śOur participation in the fund will contribute to economic growth and investorsâ€™ confidence. This will also mean enhanced returns on our investments which will redound to the greater benefit of our members and pensioners,â€ť GSIS President and General Manager Robert G. Vergara said.
The fund will invest in Philippine core infrastructure assets with an initial focus on existing projects that need expansion or rehabilitation, but will also be in a position to support the development of critical infrastructure projects from the ground up.
According to the Philippine Development Plan, around 12% of the countryâ€™s $120 billion investment requirements need to come from the private sector. PINAI will target five to 10 investments of approximately $50 million to $125 million each to provide for portfolio diversification.
PINAI will be managed by Macquarie Infrastructure and Real Assets (MIRA), the largest infrastructure fund manager globally, with approximately $97 billion of assets under management across 24 countries. The value of the assets is based on proportionate enterprise value, calculated as proportionate net debt and equity value at 31 March 2012 for the majority of assets.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members â€“ 48 from the region. In 2011, ADB approvals including cofinancing totaled $21.7 billion.
APG, a financial services provider in the collective pensions market, provides pension fund administration, asset management, management support and communication services to pension funds. For these pension funds and their 4.5 million active and retired participants from the public and private sector, APG manages pension assets totaling about â‚¬302 billion (around $370 billion) (May 2012). APG administers over 30% of all collective pension schemes in the Netherlands.
Created in 1936 through Commonwealth Act 136, the Government Service Insurance System or the GSIS provides social security coverage to employees in the government sector under a defined benefit scheme. It provides protection to its 1.4 million members against the occurrence of certain contingencies such as death, disability, separation, unemployment or retirement on the basis of their monthly compensation. Funding comes from members and the national government and instrumentalities in the form of mandatory contributions. The GSIS also serves more than 300,000 old-age and survivorship pensioners.
01 August 2012, Malaya Business Insight
by Angela Celis
The Asian Development Bank (ADB) and Algemene Pensioen Groep (APG) Dutch pension fund (APG) are investing $625 million (P26 billion) forÂ infrastructure projects in the country.
In a press conference yesterday, the two institutions groups launched the Philippine Investment Alliance for Infrastructure (PINAI) fund, alongside state-owned pension fund Government Service Insurance System (GSIS) and the Macquarie Infrastructure and Real Assets (MIRA) Group, both of which earlier announced that they will invest in the said fund.
State-owned GSIS will invest $400 million, ADB with $25 million, while the remaining $200 million are shouldered by APG and MIRA group, although the actual amount of investments for each group were not disclosed.
The private equity fund will be managed by MIRA Group, the largest infrastructure fund manager globally.
â€śThe fund will invest in Philippine core infrastructure assets with an initial focus on existing projects that need expansion and rehabilitation, but will also be in a position to support the development of critical infrastructure projects from the ground up,â€ť the ADB said yesterday.
According to the Department of Budget and Management, the governmentâ€™s infrastructure budget this year is P339.3 billion, which include capital outlays and infrastructure subsidies for government owned and controlled corporations. Next year, the DBM is proposing an infrastructure budget of P407.1 billion.
Frank Kwok, MIRA Managing Director, said that that the fund can also be used to support the Aquino administrationâ€™s public-private partnership (PPP) projects.
â€śOver the last few years, weâ€™ve been reviewing Southeast Asia as a potential region to invest in infrastructure and establish an infrastructure fund. In our review, we believed the Philippines to be one of the most promising, if not the most promising country to establish an infrastructure fund and invest in infrastructure,â€ť Kwok said.
According to the Philippine Development Plan for 2011 to 2016, around 12 percent of the countryâ€™s $14.3 billion investment requirements need to come from the private sector. The investors are looking at financing five to 10 investments, with approximately $50 million to $125 million to be provided for each project to ensure portfolio diversification.
Kwok said that possible infrastructure projects that could be financed by the fund are those in power generation and distribution, transportation projects such as toll roads and airports, utilities such as water, renewable energy, and social infrastructure projects.
â€śThe Philippines is one of the fastest growing economies in Asia and significant investments in infrastructure are required to support the continued growth of the economy,â€ť Hans-Martin Aerts, head of Infrastructure Asia at APG Asset Management Asia, said.
â€śPINAI provides for an excellent investment opportunity and we expect it to enjoy an early mover advantage and to generate attractive risk-adjusted returns for our clients,â€ť he said.
Meanwhile, Roberto Vergara, GSIS president and general manager, said that the PINAI fund is â€śnow open for business.â€ť
â€śThis fund is envisioned to create more jobs for our people and put the country on the path of sustained and higher levels of inclusive economic growth,â€ť Vergara said.
Vergara added that through the private equity fund, the GSIS will diversify its income sources and achieve greater returns that will allow the agency to provide enhanced services and benefit programs for its 1.7 million members and pensioners.
â€śPINAI will be fully deployed and invested within the three yearsâ€™ investment horizon,â€ť the GSIS chief said.
Philip Erquiaga, ADB director general for Private Sector Operations, said that based on an ADB report, Asia needs to invest approximately $8 trillion in infrastructure between 2010 and 2020 to sustain its growth trajectory.
The private sector accounts for 20 percent of financing and investment in infrastructure assets, public funding for 70 percent, while the remaining 10 percent is funded through official development assistance.
â€śGiven budgetary constraints and fiscal consolidation requirements, it will be difficult to further increase public funding for infrastructure in most Asian countries. The private sectorâ€™s share will need to expand to cover the gap in funding needs,â€ť Erquiaga said.
31 July 2012, Business Mirror
by Cai Ordinario
The Government Service Insurance System (GSIS), the Asian Development Bank (ADB) and two other international financial institutions have created a $625-million (P26.209-billion) fund to finance various infrastructure projects of the government.
Named Philippine Investment Alliance for 1 (Pinai), the fund will also involve APG, the Netherlands-based pension-fund asset manager, and the Macquarie Group. Pinai will be managed by Macquarie Infrastructure and Real Assets (Mira), the worldâ€™s largest infrastructure fund manager.
â€śAs the largest infrastructure fund ever assembled for the Philippines, this fund is envisioned to create more jobs for our people and put the country on the path of sustained and higher level of inclusive economic growth,â€ť GSIS President and General Manager Robert G. Vergara said in a briefing at the ADB Headquarters on Tuesday.
Mira Managing Director Frank Kwok said the fund would finance five to 10 infrastructure projects worth a maximum of $125 million each. The priority infrastructure projects to be financed will mostly be brownfield projects, which are in need of additional equity.
The projects to be financed may be drawn from the governmentâ€™s Public-Private Partnership (PPP) pipeline, or other infrastructure projects where private-sector entities are involved.
Kwok also said the fund could be used to finance power distribution and generation, transportation, airports, mass transportation, natural gas or renewable energy, utilities including water, and social infrastructure projects.
â€śOver the last few years, weâ€™ve been reviewing Southeast Asia as a potential region to invest in infrastructure and establish an infrastructure fund. In our review, we believe the Philippines to be one of the most promising, if not the most promising countries to establish an infrastructure fund and investing in infrastructure,â€ť Kwok said.
ADB Private Sector Operations Director General Philip Erquiaga said the fund is a welcome development for the Philippines because of its infrastructure constraints. He said the countryâ€™s own economic blueprint, the Philippine Development Plan (PDP) 2011-16 admitted as much.
According to him, the country needs $120 billion in investments in infrastructure. The government said around 12 percent of this would come from private-sector infrastructure investments.
These infrastructure investments, Erquiaga said, would be crucial in maintaining the high economic-growth path of the Philippines. He said the ADB expects economic growth to be robust at 4.8 percent this year and 5 percent next year.
â€śThe growth dividend associated with this level of infrastructure investment has the potential of being huge. I believe the Philippines is ripe for take-off,â€ť Erquiaga said.
At the sidelines of the ADB annual meeting this year, the members of the Association of Southeast Asian Nations and the ADB also created the $485-million Asean Infrastructure Fund (AIF).
The initial equity, provided by nine Asean members, amounted to $335 million; the ADB provided $150 million. By 2020, the AIF Board, composed of Asean country representatives and the ADB, hopes to grow the lending commitment of the fund to $4 billion.
The ADB official said the government of Malaysia, which provided $150 million, is the largest contributor to the fund. Other countries like Indonesia provided $120 million; the Philippines contributed $15 million.
The AIF will finance the regionâ€™s infrastructure needs, which are estimated to cost $60 billion every year. The entire Asian region is expected to require some $8 trillion in infrastructure investments to keep growth robust until 2020.
01 August 2012, Philippine Daily Inquirer
by Ronnel Domingo
The Government Service Insurance System and three investor partners on Tuesday launched the largest-ever infrastructure fund set up for the Philippines at $625 million, or P25 billion.
The fund, dubbed Pinai, or Philippine Investment Alliance for Infrastructure, also drew the participation of the Asian Development Bank, Dutch pension fund asset manager Algemene Pension Groep (APG) and Macquarie Infrastructure and Real Asset (MIRA).
MIRA is part of the Macquarie Group and was also appointed as the Pinai fund manager.
Robert G. Vergara, GSIS president and general manager, said in a briefing that the state pension fundâ€”being the lead investorâ€”accounted for $400 million of the Pinai fund.
Philip Erquiaga, ADB director general for private sector operations, said the bank chipped in â€śa nominal $25 millionâ€ť but APG and Mira declined to disclose their respective investments.
Erquiaga noted that under the Philippine Development Plan, 12 percent, or $14.3 billion, of the countryâ€™s $120-billion infrastructure investment needs for 2011-2016 must come from the private sector.
â€śIt is with this intention of helping close the gap in infrastructure financing that the ADB has collaborated with (GSIS, APG and MIRA) to establish the Pinai fund,â€ť he said.
Mira senior managing director Francis Kwok said the Pinai fund was meant for directly investing equity and equity-like instruments in infrastructure businesses and projects.
â€śIt will invest in a mix of both brownfield and greenfield projects across the infrastructure sector, including transport, power, renewable energy, water and telecommunications infrastructure,â€ť Kwok said.
The four partners wanted a diversified portfolio of five to 10 projects at $50 million to $125 million each.
â€śAs the largest infrastructure fund ever assembled for the Philippines at P25 billion, this fund is envisioned to create more jobs for our people and put the country on the path of sustained and higher levels of inclusive economic growth,â€ť Vergara said.
Vergara added that the GSIS, through the Pinai fund, was diversifying its income sources toward achieving bigger returns that would enable â€śenhanced services and benefit programs for [the agencyâ€™s] 1.7 million members and pensioners.â€ť
Vergara added that the GSIS was still ready to put in P50 billion in a planned P200-billion infrastructure bond fund meant to finance the governmentâ€™s public-private partnership (PPP) infrastructure program, â€śalthough there is no call yet for such funds.â€ť
MIRAâ€™s Kwok said that with the Pinai fund having been launched, the groupâ€™s thrust was for the fund to be deployed particularly for brownfield projectsâ€”those that were already existing and needed expansion or rehabilitation.
Kwok said such projects could include PPP projects, but clarified that the Pinai fund was not solely for the benefit of the PPP initiative.
â€śIt is also possible that we may be investing in purely private-sector projects,â€ť he added.