ADB private sector investments hit $4.75B in 2013

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Clean energy, health, agriculture are among the sectors that benefited from ADB’s investments

INVESTING IN PRIVATE SECTOR. ADB’s private sector operations cumulative investment reached $4.75 billion in 2013, a performance report shows. File photo by EPA

MANILA, Philippines – The Asian Development Bank’s (ADB) private sector investments reached $4.75 billion in 2013, a performance report showed.

Last year, ADB expanded its investment activities in core industry sectors such as renewable energy, clean water, and financial services, while continuing to grow its operations in newer markets such as the health and agribusiness sectors.

“The results show that our private sector operations are making a significant contribution to ADB’s overall financial and developmental goals,” ADB’s director general for Private Sector Operations Department (PSOD) Todd Freeland said Tuesday, July 29.

PSOD’s investment portfolio now amounts to over $6.2 billion, more than double the level prior to the financial crisis in 2007 to 2008.

“The growth in private sector operations is consistent with our belief that the private sector is vital to the development of inclusive and environmentally sustainable growth throughout Asia,” Freeland said.

“We expect to continue to expand our private sector operations significantly over the next 5 years in support of this objective,” Freeland added.

Completed private investments rise

The success rate for completed private sector transactions over the 3-year period from 2011 to 2013 rose to 67% from 53% in the previous period of 2010-2012, the 2013 Development Effectiveness Report for PSOD showed.

The report also indicates that private sector operations generally met or exceeded output targets and delivered a variety of significant developmental results.

For instance, more than 4,600 megawatts (MW) of new energy generation capacity was added, over 70,000 households received new or improved water supply, more than 13,000 jobs were created, and over 600,000 mobile communications customers benefited from investment and financing activities.

In the clean energy sector, both the volume and innovation of private sector investment approvals increased substantially, the ADB said.

Examples included a first-ever non-sovereign sustainable transport loan of $275 million to China to finance the leasing of electric and hybrid fuel buses, and a $250 million loan to partially finance a geothermal power plant in North Sumatra, Indonesia – the first such private financing in Asia for over a decade.

There was also a $2 million equity investment in an innovative mobile phone-based, pay-as-you-go system for roof-top solar systems in India. This financing provides affordable and accessible solar energy for poor, remote households in rural India where millions lack access to electricity.

In health, an equity investment of $60 million in a new health care fund was ADB’s first private sector health care intervention in many years. The fund aims to invest in end-to-end health care, from diagnostics and drug development to hospital care.

In agribusiness, ADB approved a guarantee facility for local banks to extend credit to small dairy farmers in Pakistan, and a first time commercial agribusiness loan in Central Asia to expand milk and juice production facilities for a company in Kazakhstan.

More SMEs assisted

Small- and medium-sized businesses (SMEs) are major income and job providers across most developing economies in the region, and can play a major role in inclusive growth, the multilateral bank said.

As such, in the finance sector, the Trade Finance Program assisted more than 1,800 SMEs in 2013, with transactions valued at more than $4 billion.

In addition, over 1,100 SMEs benefitted from ADB support through targeted lending programs to local banks and ADB continued to be an active investor in private equity funds that support SME development. – Rappler.com

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