- J.P. Morgan Chase announced the creation of a new business called the Development Finance Institution to boost private investment in emerging-market development projects.
- The lender said it can finance more than $100 billion in projects annually from its investment bank.
- J.P. Morgan hopes to turn development finance into a traded asset class.
The lender said it can finance more than $100 billion annually from its investment bank and created a formal methodology to define projects that fit commercial and development targets. It also hired Faheen Allibhoy, an 18-year veteran of the World Bank-affiliated International Finance Corp., to lead the new group.
"The emerging markets are where the action is," Allibhoy told CNBC. Places like Indonesia, Turkey, Mexico and Egypt are "countries that are building infrastructure and that are in need of capital, and they're sizable economies."
Development finance — which funds projects to boost economic growth and quality of life in emerging economies — will be a major topic as world leaders and CEOs gather this week at the World Economic Forum in Davos, Switzerland. It can include funding for infrastructure like bridges and wind farms or microfinance lending to entrepreneurs.
According to J.P. Morgan, there is a $2.5 trillion annual shortfall in investment to achieve the goals set by the United Nations to address climate change, health, education and food security in the developing world by 2030.
With its new business, the biggest U.S. bank hopes to close the gap by helping to turn development finance into a traded asset class, originating assets for distribution to investors. It will also connect public and private pools of capital, from pensions and family offices to philanthropies.
Daniel Pinto, co-president of J.P. Morgan and head of its corporate and investment bank, said in the announcement that the aim of the effort is to "increase engagement with clients and investors interested in financing critical projects and transactions in emerging markets."