Expanding Africa's investor baseJapan's Mitsubishi UFJ Financial Group - better known as MUFG - is one of the giants of the banking world. It took its modern form in 2005 following a series of mergers that made the group the largest financial institution in Japan, but traces its origins to the nineteenth century. And the bank has expanded well beyond Japan's shores, having established a worldwide presence.
In Africa, a key focus for MUFG is its work with sovereign funds and development finance institutions.
"For the sovereigns especially, we focus on arranging long tenor financing for a range of their infrastructure requirements," says Ankit Khandelwal, MUFG's head of Africa for sovereigns, development finance institutions DFIs and blended finance. "And this is where our blended finance platform is the key catalyst for us to do a lot of the transactions."
The blended finance approach involves establishing fund structures in which some investors - typically DFIs or other providers of concessional finance - contribute "first loss capital". Fully commercial investors can then invest in the same investment fund while bearing less risk.
In Africa, MUFG's blended finance platform seems to illustrate the potential of this approach. "We started this in 2018. And over the last seven years now, we've raised around 7bn 8bn in financing for a range of infrastructure projects or sovereign financing," says Khandelwal. "In each one of those transactions, we've brought in new sources of liquidity. So, from a government's perspective, they're getting competitive financing, long tenor, but strategically they're also getting new investors who traditionally would not lend to one of these sovereigns."