ADB to set up financing platform for infra projects

MANILA, Philippines — The Asian Development Bank (ADB) has teamed up with three investment firms for the establishment of a debt financing platform to fund sustainable infrastructure projects in Southeast Asia.

In a statement, Manila-based ADB said it signed a memorandum of understanding with three large investment firms to boost the commercial development of sustainable infrastructure projects in Asia.

Initial focus will be on Southeast Asia, one of the most vulnerable regions to climate change.

One of the partners is HSBC Holdings, a British multinational investment bank and financial services company and one of the largest banking and financial services institutions in the world.

It also teamed up with Singapore’s state-owned Temasek Holdings Ltd. and Clifford Capital Holdings, a specialist financing and distribution platform for infrastructure and other real assets globally and is also headquartered in Singapore.

Based on initial feasibility assessments, HSBC and Temasek will be equity partners in the platform and ADB and CCH will be strategic partners.

The financing platform aims to turn lesser bankable projects into bankable ones by providing concessional capital and addressing policy and regulatory constraints hampering private investments in sustainable infrastructure.

HSBC, Temasek and CCH will initially focus on clean transport, renewable energy and energy storage, and water and waste management.

They will eventually venture into climate adaptation, agriculture and land use, and technology-led solutions.

ADB vice president Ahmed Saeed said the multilateral lender is beefing up its engagement with governments and other aligned actors to expand the pool of bankable, sustainable infrastructure projects, increase their risk-return profile, and attract financing from private investors.

He said the ADB would provide technical assistance in project development and sector reforms and work with partners to use blended finance and other risk mitigation solutions to mobilize sustainable infrastructure financing across the region.

Data showed that developing Asia needs to invest $26 trillion, or $1.7 trillion a year, from 2016 to 2030 to maintain its growth momentum, end poverty, and address climate change.

ADB maintained that the public sector cannot meet the rising demand for infrastructure and governments are encouraging the private sector to pour in much-needed resources.

Unfortunately, 65 percent of Asia’s infrastructure projects are not considered bankable, and it requires significant upfront cost and time on project preparation to get the projects to a bankable stage.

In turn, less bankable projects face a range of barriers to accessing private sector finance including a variety of capability, policy, and economic issues which can impact a project’s ability to attract commercial financing.

ADB’s partnership with the three investment firms aims to bridge the financing gap by helping countries develop bankable and sustainable infrastructure projects based on global standards.

The debt financing platform will also apply international best practices for environmental, social, and governance, in line with safeguards standards set by international financial institutions.