MDB/DFI participation in Bayfront Infrastructure Management

MOBILIST’s landmark equity investment in a Bayfront securitisation vehicle demonstrated how development finance can unlock institutional capital at scale and support the climate transition. Bayfront’s approach supports deeper liquidity, fosters investor confidence, and enhances the profile of infrastructure debt as an investable asset class in emerging markets.

The Challenge

Mobilising private capital for large-scale infrastructure projects in Asia is made more challenging due to limited liquidity and investor familiarity with infrastructure-backed debt. Securitisation can help to address this, but most MDBs and DFIs do not hold enough assets or may lack the necessary skills and institutional knowledge to launch a securitisation programme by themselves.

The Approach

Instead of developing their own securitisation programmes, DFIs and MDBs could collaborate with partners already active in the public and private securitisation markets. This could entail pooling assets from MDBs and DFIs alongside private sector originators into portfolios managed by private sector sponsors. MDBs and DFIs can act as investors, lenders, or guarantors to enable the securitisation of impactful assets.

Bayfront Infrastructure Management (Bayfront) exemplifies this approach. It purchases infrastructure loans from commercial banks, pools them, and issues infrastructure asset-backed securities (IABS) that represent claims on the underlying cash flows. Since its inception in 2018, Bayfront has launched six IABS issuances, each backed by diversified Asian and Middle Eastern infrastructure loans.

Bayfront Share Holders, MDBs in bold

MOBILIST’s Investment

MOBILIST made a catalytic equity investment in Bayfront’s fourth issuance, Bayfront Infrastructure Capital IV (BIC IV). The total securitisation transaction was sized at US$410.3 million with a 10% equity tranche. MOBILIST committed an anchor investment of up to US$20.4 million in the Preference Shares in BIC IV and received a final allocation of US$5 million, given investors’ robust demand. The notes were listed on the Singapore Exchange (SGX).

MOBILIST’s equity contribution played a catalytic role by taking a higher-risk, higher-return position in the capital structure. Rather than investing in highly rated notes, MOBILIST pioneered direct external equity provision on a commercial basis into a private sector securitisation vehicle. The equity tranche is crucial to the securitisation process, which results in tranches matching the risk return profile of different categories of investors.

The Impact

MOBILIST’s equity participation in BIC IV implied a mobilisation rate of 80 timesand sets out to demonstrate the commercial case for investment in the equity tranche of IABS.
Bayfront established a dedicated structure to originate, securitise, and distribute infrastructure-backed debt to institutional investors. This has expanded the lending capacity for originating banks.
Bayfront’s series of issuances helped establish a track record of primary IABS issuances and provided a valuable Asian market benchmark.
Information about the pricing and performance at listing and then in the market is an important public good for other issuers and investors considering comparable transactions.
This is helping to establish infrastructure debt as a mainstream asset class, creating a virtuous cycle of more origination and greater demand and ultimately helping to address Asia’s infrastructure financing gap.

MDB/DFI participation in Bayfront Infrastructure Management

Read the MOBILIST Research Note on this transaction.