ADB invests $25 million in private equity fund focused on ASEAN SMEs

MANILA, Philippines — The Asian Development Bank (ADB) has agreed to provide a $25 million equity investment in Exacta Asia Investment II L. P., a private equity fund focused on investing in small and medium-sized enterprises (SMEs) in Southeast Asia.

The bank said its investment in Exacta II would allow it to invest growth equity in smaller firms particularly those in Association of Southeast Asian Nations (ASEAN) members Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam – economies that are driven by domestic consumption and export.

This is meant to address the issue of having low private equity penetration in Southeast Asia, which is crucial to encouraging investments and creating new jobs.

“ADB’s investment will help well-managed and middle-market SMEs in Southeast Asia to realize their growth plans, thereby driving employment, tax generation, skills transfer and regional trade,” said Janette Hall, ADB director for Private Sector Investment Funds and Special Initiatives Division.

“Investing in Exacta II allows ADB to participate in Southeast Asia’s continued economic growth while providing development benefits for people in the subregion,” she added.

Exacta II is a private equity fund with a target capitalization of $250 million. It intends to invest about $10 million to $40 million per transaction in some of Southeast Asia’s SMEs and lower middle-market companies, particularly those engaged in manufacturing, technology and services.

ADB’s new long-term Strategy 2030 supports the expansion of the bank’s private sector operations.

This can be done though expanding regional reach through private equity funds, supporting greater financial inclusion, strengthening the finance sector in capital markets, diversifying into other sectors, and widening geographic coverage.