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ASIAN DEVELOPMENT BANK

Overview of Private Sector Operations

31 January 2017
KEY OBJECTIVE

Private Sector Ops


Seeks to identify
commercially
viable
transactions without sovereign guarantees

generate attractive financial returns

promote environmentally sustainable


and inclusive economic growth
STRATEGY 2020
10 priorities emphasized in the Mid-
ADBs Long-Term Term Review of Strategy 2020
Strategic Framework 1) Poverty reduction and inclusive
economic growth
2008-2020 2) Environment and climate change
3) Regional cooperation and
integration
4) Infrastructure development
5) Middle-income countries
6) Private sector development and
operations
7) Knowledge solutions
8) Financial resources and partnership
Inclusive Environmentally Regional
Growth Sustainable Growth Integration 9) Delivering value for money in ADB
10) Organizing to meet new challenges
VALUE ADDITION
one co-
50 years stop shop financers
of deep experience comprehensive lead in project and
in emerging economies financial solutions financial structuring

with extensive network enhance environmental, social, exemption from currency


in the Asia and the Pacific and governance standards conversion and remittance
restrictions, withholding taxes
and provisioning requirements

stamp of approval country risk mitigation, explicit cover of risks for


with governments, private neutral broker with governments guaranteed banks
investors and lenders
PRODUCTS AND SERVICES

Technical
Investment Asset
and Advisory
Products Management
Services
Debt to equity to Technical Co-managed
guarantees assistance investments
Syndications Safeguards Co-general
Trade finance Corporate partner
Treasury products governance Concessional
Risk management funding
Debt $10M - $250M+
Typical terms
7 years (corporate) to 15+ years (project)
LIBOR / ADB cost of fund in local currency + credit spread
Flexibility with respect to fixed, floating, amortization
When is it relevant?
Strong project and/or established company with large balance sheet,
strong cash flow
Possibility to mobilize cofinancing under B-loan or risk participation

Equity (inc PE) $2M - $75M


Typical terms
25% ownership maximum
Never the single largest investor
Investment Board seat
Products Minority protection rights
Put on the parent company
When is it relevant?
Growing company in a pre-IPO or pre-trade sale situation
Debt to equity to

guarantees
Syndications
Guarantees $20M - $250M (PCG)
Trade finance Typical terms
$400M (PRG)
Treasury products Partial Credit Guarantees: market based, fees are based off the
Risk management lenders margin
Political risk guarantees: market based, fees are based off the
reinsurance market
When is it relevant?
Where other lenders are more efficient than ADB in (i) mobilizing local
currency, (ii) reaching target customers (PCG), or extending tenors
(PCG)
In frontier markets (PRG)
Technical and
Advisory Services
$100K - $1M
Typical terms
For project preparation
TA, reimbursable at
closing Technical Asset
For capacity and Advisory Management
development TA, non- Services
reimbursable grant
When is it relevant? Technical Co-managed
assistance investments
For projects in need of Safeguards Co-general
additional, (concessional) Corporate partner
financial assistance governance Concessional
funding
Asset Management
Co-managed Investments
Typical terms Leading Asias Private Sector Infrastructure Fund
Co-investment portfolio program $1.5 billion commitment from JICA managed by ADB
involving ADB and one or several Dedicated cofinancing vehicle for private sector
investors in debt, equity or infrastructure investments (debt to equity)
guarantees generated by ADB Parallel and concessional tranches

Co-general Partner
Typical terms
ADB participates as a general
partner (exceptionally), limited
Technical Asset
partner and investment committee and Advisory Management
member Services
Concessional Funding Technical Co-managed
Typical terms assistance investments
Long term loan at concessional Safeguards Co-general
interest rate to be blended with Corporate partner
ADB financing governance Concessional
First loss cover funding
Preference for climate-related
support by donors
When is it relevant?
For projects in need of additional,
concessional financial assistance
HOW TO WORK WITH PSOD
Eligible Transactions
Located in ADBs developing member
countries

ADBs target sectors (infrastructure,


financial sector, agribusiness, etc.)
High Innovative Highest Crowding in
and themes (climate change,
demonstrational (new technologies integrity and commercial
inclusive business, etc.)
value and or ways of doing ethical financing
replicability business) standards
Developmentally and commercially


sound, with a clear business plan
The earlier, the better to approach PSOD
Financing not directly guaranteed by PSOD can
the government provide some help in project preparation and structuring, by,
for example, engaging with the government on the terms of
Clear financing or other need concessions and other project contracts
(safeguard support, risk coverage, suggest financing plan options to fit the transactions needs,
etc.) from ADB selecting from ADBs variety of instruments and helping to
attract financing from other parties
Willing to employ professional
advisors (legal, technical, Essential that the transaction meets ADBs environment and social
environment and social, etc.) standards, so best to involve ADB from the ESIA scoping stage

For equity investments, a Board seat


for ADB and clear exit strategy
KEY SECTORS

Infrastructure & Finance & Health &


Natural Res Capital Markets Agribusiness Education

Generation Access to finance Inputs (seeds, Suppliers


(particularly (rural, microfinance, irrigation, cold (pharmaceuticals,
renewables), housing, SMEs, climate, storage), farming medical equipment),
transmission, inclusive business and (crop, livestock, Providers (hospitals,
distribution, gender mainstreaming), dairy), processing clinics), distributors
water/waste, insurance, digital (grains, meats, (pharmacies, supply
transport and finance, filling market packaging), chain), e-health, and
associated services gaps via trade and distribution in person and online
(airports/airlines, supply chain (wholesale/retail education
roads, ports/shipping, financing markets)
logistics, rail/rolling
stock), natural
resources (oil/gas,
mining)
2015-16 APPROVALS
Georgia Kyrgyz Republic Bhutan
n Bai Tushum Bank
n Hazelnut Value Chain Development
n TBC Bank
n Credo Bank Peoples Republic of China
n FINCA Bank n Western Counties Water and Wastewater Mgmt
n SME Industrial Wastewater and Sludge Treatment
Armenia n CFPA Microfinance
n FINCA Bank n Yingda International Leasing for Healthcare Finance
n Sustainable Dairy Farming and Milk Safety
n Integrated Wastewater Management
Azerbaijan n Inclusive and Sustainable Livestock Farming
n AccessBank n Urban and Rural Integration Water Distribution
n FINCA Bank
n Shah Deniz Stage II Gas Field Expansion Myanmar
Pakistan n Nationwide Telecommunications
n Engro Fast Track LNG Regasification
n Myingyan Natural Gas Power Plant
n 102 MW Gulpur Hydropower
n Yangon Urban Renewal and District Cooling
n Telecommunication Towers Infrastructure
n Triconboston Wind
n Khushhali Bank
Thailand
India n 260 MW Northeastern Thailand Wind Power
n IndusInd Bank n Distributed Commercial Solar Power
n Shapoorji Affordable Housing n Grid-Parity Rooftop Solar
n Green Energy Corridor & Grid Strengthening
n Mytrah Wind and Solar Power Development Cambodia
n Simpa Off-Grid Prepaid Solar Leasing n Cambodia Solar Power
n RBL Bank
Philippines
n PNB Housing Finance
n Tiwi and MakBan Geothermal Climate Bonds
n JFS Limited Debt Financing n 150 MW Burgos Wind Farm
n Au Financiers Limited
Bangladesh Indonesia
n ReNew Clean Energy n BRAC Bank
n Eastern Bank Limited
n Tangguh LNG Expansion
Sri Lanka n Muarah Lahoh Geothermal Power
n LOLC Finance and LOLC Micro Credit
n Hatton National Bank Regional
n Distributed Energy Storage Solutions
n Agribusiness n Private Equity n Microfinance Risk Participation & Guarantee
n Energy Renewable n Transport n Micro Credit Ratings International
n Energy Other n Water n Creador Fund III
n Financial Institutions n Other n VI (Vietnam Investments) Fund III, LP
n Info, Com and Telcom n High-Value Horticulture Development
APPROVAL CYCLE
1 Concept Review 2 Due Diligence 3 Final Review 4 Board Approval
P
Standard Deals

Review of business plan and Technical, commercial, Investment Committee 21-day circulation to the
financials legal and safeguards due review Board for review
diligence
Internal peer review Presidents review Boards approval
Finalize term sheet
Concept Review
Committees review Formal risk rating

Disclose safeguards
documents

1 Early Review 2 Due Diligence 3 Final Review

Review of business plan & Technical, legal Investment Committee


FAST Deals*

financials commercial, & safeguards review


due diligence
Initial risk rating Presidents approval
Finalize term sheet
FAST Committee review
Formal risk rating

Disclose safeguards
documents

Notes:
(*) Any nonsovereign financing $20 million for debt and $10 million for equity. Other requirements apply (e.g. safeguards categorization).
MANAGEMENT TEAM

Michael Barrow
Director General

Christopher Thieme Kenji Yuhaku


Deputy Director General Senior Advisor

Infrastructure Infrastructure Financial Investment Funds & Portfolio Guarantees and Transaction
Agribusiness
Finance 1 Finance 2 Institutions Special Initiatives Management Syndications Unit Support

Projects in Central Projects in East Asia, Non-sovereign public Private equity funds, Agribusiness, food Portfolio mgmt, Co-financing Development
Asia, West Asia and Southeast Asia and and private financial special initiatives security and safety project admin and operations and risk effectiveness, safeguards
South Asia the Pacific institutions and asset mgmt special accounts transfers and integrity matters

Shantanu Christine Janette Martin Craig Bart Mark


Chakraborty Vacant Engstrom Hall Lemoine Roberts Raemaekers Kunzer
Director Director Director Director Head Director Head Director
www.adb.org