Philippines to benefit as US DFC backs $1.5-billion Asian energy platform in largest-ever investment
The Philippines is poised to benefit from the biggest investment ever approved by the United States International Development Finance Corp. (US DFC), as Washington moves to expand energy infrastructure across the Indo-Pacific region amid rising demand for liquefied natural gas (LNG).
DFC is the US government’s development finance institution. It mobilizes private-sector investment through loans, equity investments, political risk insurance, and other financing tools to support economic development as well as advance US foreign policy objectives in emerging markets (EMs).
Specifically, the ISQ Asia Energy Infrastructure Investment Platform will focus on investments in the Philippines, India, Indonesia, Malaysia, and Vietnam. It aims to strengthen energy security among US allies while expanding American LNG and other hydrocarbon, equipment, and service exports to Indo-Pacific.
Last June 3, DFC announced that its board approved $2.5 billion in new strategic investments, including the $1.5-billion commitment through a combination of debt and equity financing to establish the Indo-Pacific energy investment platform in partnership with Miami, Florida-based fund manager I Squared Capital (ISQ).
DFC described the transaction as “the single largest project investment in [its] history.”
According to DFC, this investment platform will facilitate the buildout of energy security infrastructure across Indo-Pacific, particularly in South and Southeast Asia.
“The platform will mobilize US private capital to develop LNG and other energy infrastructure in the region,” DFC said in a statement.
Documents showed that the project will seek to acquire controlling stakes in LNG and other petroleum-product supply chain assets across the five South and Southeast Asian host countries. Planned investments will focus on import and storage facilities, transmission and distribution logistics, end-use infrastructure, as well as related marine assets.
DFC noted that South and Southeast Asia are experiencing strong LNG demand growth due to rising power requirements, declining domestic gas production in some markets, and an ongoing shift away from coal-fired generation.
“Given the region’s expected economic growth, we believe reliable LNG and other petroleum products infrastructure will be important to meet energy demand,” according to DFC documents.
The project is expected to reduce infrastructure constraints, improve the reliability of LNG and other petroleum products delivery, expand access to energy, as well as strengthen energy security for households and industries in line with local priorities.
DFC said its investment will support the capitalization of the counterparty/issuer, ISQ Asia Energy Infrastructure Partnership, L.P., which will invest alongside other ISQ-managed funds through the ISQ Asia Energy Infrastructure Investment Platform.
For this project, the specific fund manager is I Squared Capital Advisors (US) LLC. DFC noted that many of the platform’s limited partners are also US entities.