International Infrastructure Finance Company Fund (IIFC Fund)

The IIFC Fund is designed to serve as a flexible institutional scale counterparty to global banks to enhance the management of regulatory capital. The IIFC Fund investment strategy is positioned at the intersection of two major investment themes—the global shortage of bank regulatory capital and the urgent need for infrastructure. The IIFC Fund intends to address each of these shortfalls while seeking to generate favorable risk-adjusted returns by structuring its investments to assist project finance banks in the management of their regulatory capital, economic capital, and liquidity exposure. By helping banks to release regulatory capital, the IIFC Fund expects to facilitate a significant expansion in infrastructure lending, building dramatic new capabilities for Impact through credit creation at global financial institutions. Mariner also understands that socially critical infrastructure services are not always credit-worthy from a bank perspective. We have therefore chosen to dedicate 5% of IIFC Fund management fees to UNICEF, enabling them to expand their life-saving relief and aid programs.

Financial description

The Fund’s investment strategy is positioned at the intersection of two major investment themes—the global shortage of bank regulatory capital and the urgent need for infrastructure. In response to the global financial crisis, regulators around the world expanded financial regulatory frameworks. These frameworks, modeled generally off of the Basel III rule-set, establish strict capital and liquidity standards for banks and have contributed to material funding shortfalls at these institutions worldwide. Given the relatively tight credit spreads generally associated with infrastructure loans, the regulatory requirements make it very difficult for banks to profitably hold infrastructure loans as these loans now require high and increasing amounts of capital and long-term matched funding, despite the favorable historical default and recovery performance of the asset class. At the same time, as discussed above, there is significant need for investment in global infrastructure assets. Mariner believes that these circumstances have created an opportunity for non-bank financial counterparties to generate favorable risk-adjusted returns by assisting banks in the management of their regulatory capital and funding exposure against their vintage infrastructure loan books while facilitating fresh lending into the sector.