ADB, Japan launch $6bn infra fund

Japan's development agency will provide an initial $1.5bn in equity to the vehicle, which will be managed by ADB.

The Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA) have established a $6 billion fund that will target infrastructure in Asia and the Pacific, fleshing out a partnership the two organisations signed last December.

JICA will seed the Leading Asia’s Private Infrastructure (LEAP) fund with $1.5 billion in equity, while ADB will manage the vehicle through its private sector operations department. The remaining $4.5 billion will come from ADB and other co-financiers, an ADB spokesperson told Infrastructure Investor.

“Infrastructure development currently accounts for about 65 percent of ADB’s private sector operations,” the development bank said in a statement, adding that it aims to expand its large-scale private infrastructure operations by leveraging JICA’s resources and risk-bearing capacity.

The new fund has a flexible mandate that will allow it to invest in a range of infrastructure sub-sectors, such as transportation, communications and health, including PPPs. The vehicle will be able to invest at different stages of project development by deploying debt, equity and mezzanine instruments. It will also invest in energy and power, with a focus on renewables and energy efficiency.

“Through this equity investment in LEAP, which will be financed from its private sector investment finance, JICA aims to further expand its private sector investment activity in quality infrastructure projects in developing countries in Asia and the Pacific,” the Japanese development agency said in a separate statement.

The collaboration between the two parties is part of Japan’s Partnership for Quality Infrastructure initiative. When it was first announced last November, ADB and JICA said they would invest up to $16 billion in infrastructure across the region over the next five years.

In addition to LEAP, the two organisations will also contribute $5 billion to a co-financing facility targeting sovereign borrowers over that same time period.