ADB core infra fund to make debut investment this year

The $1.5bn vehicle has drawn interest from Japanese institutions and companies keen to explore co-investment opportunities.

The Leading Asia’s Private Infrastructure Fund, a $1.5 billion vehicle established by the Asian Development Bank and the Japan International Cooperation Agency, aims to make its debut investment by the end of 2016, according to a senior official at the Manila-based lender. 

“We are now looking at two to three projects and seek to invest in our first project with board approvals by the end of this year,” said Michael Barrow, director general of ADB’s private sector operations department, adding that several deals are already slated for 2017. 

Although he declined to provide further details on the projects currently in LEAP’s pipeline, he stressed that one of the funds’ key investment areas would be renewables. The fund targets core assets in the power generation sector as well as water and urban infrastructure, transport, information communications and health assets. 

The vehicle, a trust fund sponsored by JICA and managed by Barrow’s department, was set up in March and became fully operational on 1 August. It has a five-year investment period. Barrow said ADB may set up other similar vehicles in partnership with governments in the future.   

LEAP will be focused on ADB’s borrowing member countries, targeting projects at different stages of development through a variety of arrangements including PPPs, joint ventures, infrastructure concessions and corporate financings. Using a range of debt, equity and mezzanine instruments, the fund eyes investments worth between $10 million and $200 million. 

ADB recently hosted a roadshow in Tokyo attended by a host of Japanese banks, trading houses and manufacturing companies interested to explore investment opportunities alongside the fund. 

Barrow acknowledged witnessing sustained interest from Japan but noted the JICA-backed fund is not limited to co-investing alongside Japanese institutions or companies. 

ADB said that LEAP is expected to generate at least $6 billion in total financing, combined with ADB’s own capital injections and that of commercial co-financing partners.