ADB private sector financing tops $2.6 billion in 2015, up 37%
As a result of this significant expansion, ADB’s private sector investment portfolio has increased to over $8 billion, and its private sector operations are now targeted to double from current levels by 2020.
In addition to the provision of its own capital, ADB seeks to catalyze the flow of third-party commercial financing into its transactions through a variety of cofinancing and risk mitigation products.
In 2015, ADB’s private sector cofinancing was over $4.5 billion, representing over 40% of total ADB cofinancing volume during the year, and including nearly $1.5 billion of B loan syndications and risk transfers across such diverse markets as Azerbaijan, the People’s Republic of China, India, and Myanmar.
ADB also continued to ramp up its efforts to create more commercially-viable public-private partnerships (PPP) in the region, highlighted by its service as transaction advisor for the Philippines’ largest ever PPP, a $3.8 billion investment in the North South Railway and commuter rail line.
Alongside the growth in overall volume, ADB’s private sector operations also reached record levels in strategic priority sectors in 2015, including climate change, frontier economies, gender equality, and inclusive business.
Over 30% of private sector transactions in 2015 were focused on climate change and/or renewable energy, including the first “green bond” in the region for a geothermal operator in the Philippines, an innovative credit-enhanced project bond for the refinancing of a wind power company in India, and the financing of new wind power generation project in Thailand. Of 9 private sector energy investments approved in 2015, 7 are considered “green” projects.
Over 40% of transactions in 2015 were in “frontier economies” – defined as lower-middle-income and low-income countries, but excluding India. ADB has made investing in frontier economies a priority, as the institution focuses its capital on countries that have traditionally had more difficulty in securing private sector financing.
Notable frontier economy transactions included ADB’s first ever deal in Bhutan to support agribusiness, its first power and telecommunications financings in Myanmar, its first liquid natural gas deal in Pakistan and several financial institutions transactions in the southern Caucuses and Central Asia.
Fully two-thirds of private sector transactions in 2015 contained specific gender elements, including projects that directly target women, as well as those that connect households to services that are relatively more beneficial to women, such as access to health, finance, energy and water.
In addition, "inclusive business" transactions targeting the economically disadvantaged accounted for 26% of ADB's private sector financings during the year, and the majority of the bank’s over $750 million of financing to financial institutions in 2015 was directed to financial inclusion and gender equality in diverse markets such as Georgia, India, Kyrgyz Republic, and Sri Lanka. ■