The Asian Development Bank (ADB) has sealed a public-private partnership (PPP) co-advisory agreement with eight global commercial banks, a move aimed at accelerating the flow of private funds into critical infrastructure projects in developing Asia.
This agreement, the first formal co-advisory framework between a multilateral development bank and international commercial lenders, complements the $64 million pan-Asian PPP fund ADB launched last week with a view to catalysing private sector participation in building Asia’s infrastructure.
“Coupling the in-depth market experience of the global banks with ADB’s PPP expertise in developing Asia and strong relationships in the region should help public sector clients structure successful, bankable PPPs without crowding out private sector advisors,” said ADB managing director general Juan Miranda, who signed the agreement on behalf of ADB.
The eight banks involved in the partnership are Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, Crédit Agricole CIB, HSBC, Mizuho Bank, Macquarie Capital, Société Générale and Sumitomo Mitsui Banking Corporation. The agreement was signed on the sidelines of the 48th annual meeting of ADB’s board of governors last week.
A source close to the matter told Infrastructure Investor that one of the main focuses of the partnership would be to develop a common framework for cross-border PPP transactions in Asia.
“There are talks at one of the Japanese banks in the group of allocating up to 30 financial advisers based in Singapore, Tokyo and Jakarta to work on ad hoc projects. Both ADB and the eight banks will be sourcing out projects to advise on, with ADB taking the lead on guidelines at first,” the source said.
The co-advisory teams will aim to improve the future income flows generated by projects, bring international best practices to PPPs, and develop the region’s capacity to deliver bankable transactions.
“Under the agreement, ADB and the eight banks can work together to provide independent advice to governments in developing Asia on how best to structure PPPs to make them attractive to the private sector and to manage the subsequent PPP bidding process. The governments will, however, make the final choice of PPP winning bidders,” noted a statement from ADB.
According to ADB estimates, developing Asia needs to spend $8 trillion between 2010 and 2020 on national infrastructure to bring it up to speed. Many governments hope to raise finance for energy, roads, railways, ports, airports, water, and other key infrastructure projects through PPPs.
Based in Manila, ADB aims to reduce poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable development and regional integration. Established in 1966, it is owned by 67 members, including 48 from the region. In 2014, ADB approved investments totalling about $22.9 billion, including co-financements worth $9.2 billion.