J.P. Morgan Chase (NYSE:JPM) announced on Tuesday the creation of its Development Finance Institution to boost private investment in emerging-market projects.
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.
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.
In 2019 alone, J.P. Morgan served clients in 82 of the 144 World Bank-eligible borrowing countries. The DFI estimates that J.P. Morgan will be able to finance development activities valued at more than $100 billion annually from investment banking transactions alone, with additional contributions from its markets businesses.
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