With an aim to provide capital to early-stage companies through small-scale venture capital (VC) funds, Asian Infrastructure Investment Bank (AIIB) is launching a venture capital (VC) programme – AIIB Venture Capital Investment Program for Green and Technology-Enabled Infrastructure.

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The bank will be mobilising USD 130 million with an additional USD 30 million as a co-investment sleeve for its first inaugural VC programme for sustainable infrastructure.

The initial target portfolio will comprise approximately 12-15 VC funds to create a well-diversified VC portfolio which extends AIIB mandate and thematic priorities.

Despite the prolonged economic uncertainties in the global markets, VC investment has exhibited continued strength in South and Southeast Asia and collectively across the Caucasus, Central Asia, Africa and the Middle East, the bank said in its statement. However, these regions are facing less representation, which invites further capital to bridge the funding gap.

With this non-sovereign-backed financing project, AIIB’s three-year captive VC investment programme aims to drive and support early-stage companies across AIIB members to innovate and adopt new technologies.

It also aims to create new business models that play a catalytic role in the promotion of green and tech-enabled infrastructure through small-scale VC funds.

“This is the first time since its founding that AIIB is entering the Asian venture capital market,” said AIIB Director General, Banking Department (Region 1), Dongik Lee. “The VC investment space is characterized by fast transaction speed, a smaller average ticket size and a unique risk-return profile. The VC Program will help AIIB build strategic partnerships and diversify its equity portfolio by partnering geographically with reputable and seasoned VC fund managers.”

AIIB’s Jea Young Huh, Principal Investment Officer, Private Equity, added that the VC program adopts a portfolio-driven approach to mitigate risk through diversification and a rigorous cherry-picked selection of VC fund managers.

“This way, AIIB has the dual role of a facilitator and an influencer in accelerating the adoption of innovations in promoting sustainable infrastructure,” said Huh.

Also read: Kotak Infrastructure Investment Fund gets commitments of Rs 5,328 crore from marquee investors

(Edited by : Pradeep John)