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ADB Approves Equity Investment in Asian Infrastructure Development Co., Inc.

The Asian Development Bank approved an equity investment of 3 billion yen ($30 million equivalent) in the Asian Infrastructure Development Company Limited (AIDEC), an investment company designed to finance infrastructure projects in Asia.

The other main shareholders are Overseas Economic Cooperation Fund (OECF) of Japan and Japanese and other regional private institutional investors. The company -- which marks the first effort to focus on investors within Asia for infrastructure projects -- seeks to raise total equity capital of 100 bil

Infrastructure bottlenecks are an increasing constraint on development in many of the Bank's developing member countries (DMCs). However, because the resources required for infrastructure development are so great, neither the countries themselves nor the Bank or other multilateral and bilateral agencies are able to finance this in its entirety. Private financial resources are, therefore, crucial to the development of this sector.

AIDEC will provide financing to develop viable infrastructure projects in Asia through loans or by investing in debt securities, and making equity or equity-linked investments in infrastructure projects in the region. The company will seek to offer investee projects both loan and equity finance to facilitate the development of selected projects. Fifty per cent of the subscribed capital will be allocated for equity investments, and the rest will be provided in the form of loans.

The sectors to be considered for investments include electricity (generation, transmission and distribution); gas (transportation and distribution); airports, ports, roads and other transport systems; urban projects; water and sewage treatment; and other infrastructure-related industries.

The Bank's investment in AIDEC is expected to catalyze significant amounts of resources for infrastructure development. It is anticipated that each dollar of the Bank's equity investment will help mobilize about $30 of funds for equity and debt investments.

AIDEC is the first company to provide debt financing to private sector infrastructure projects in Asia. The Bank has played a major developmental role in structuring the fund in order to make it attractive to private investors and potential borrowers.

AIDEC Management Company Private Limited (AIMAC), a newly formed Singapore-based wholly-owned subsidiary of the company, will manage its investments. The company is expected to be listed on one of the major stock exchanges in the region within five to seven years of the start of operations.

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