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p. 19 of 95 BACK | NEXT Message from the Chairman of the Board of Directors Members, Capital Stock and Voting Power The Record Abbreviations 2004 in Review: Board of Directors' Report New and Revised Policies and Procedures Development Partnerships Governing Structures Financing Operations Funding Financial Resources Loans Technical Assistance Grants Equity Investments Cofinancing and Guarantee Operations Resource Transfers Private Sector Operations Special Theme: The Changing Face of the Microfinance Industry: Building Financial Systems for the Poor Part 1: Institutional Effectiveness Part 2: Poverty Reduction Part 3: Financial Statements: Management's Discussion and Analysis

Annual Report 2004 : 2004 in Review: Board of Directors' Report

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Private Sector Operations

ADB ended 2004 with a total of about $807.2 million in approved assistance in the private sector. This represents a 49% increase over 2003 assistance of $542.7 million. The approved interventions comprise 12 equity investments of $185.0 million, loans of $346.9 million for six projects, a partial credit guarantee of $65.3 million, a political risk guarantee of $10.0 million, and a cross-currency swap with the Philippines of up to $200.0 million (see tables 9–12 in the Statistical Annex). ADB's proposed loan and equity investment will mobilize funding from other sources leveraging ADB's own funds by 5.08 times.

Since ADB's first private sector investment in 1983, it has approved 175 projects with a cumulative amount of $4.3 billion inclusive of equity, loans, guarantees, complementary financing schemes, and a cross-currency swap with a DMC. ADB's cumulative equity and loan approvals of $2.8 billion have catalyzed a total of $23.4 billion in funding for private sector projects leveraging ADB's investments by a ratio of 7.3 times. Cumulative disbursements for equity investments and loans amounted to $1.8 billion.

As of 31 December 2004, the overall private sector exposure amounted to $1.5 billion and consisted of $485.3 million in equity investment, loans of $654.7 million, and guarantees of$322.9 million. The bulk of ADB's private sector exposure is infrastructure projects with a total of $746.9 million in exposure, followed by investment funds and financial institutions at $582.1 million, with the balance accounted for by other sectors at $133.9 million.

The outstanding private sector exposures are interventions largely to India (16.7%), Sri Lanka (14.3%), Bangladesh (13.4%), PRC (10.6%), and Thailand (10.4%). Regional projects account for roughly 13.2% of total exposure.

During the year, ADB actively sought the full and partial divestments of equity shareholdings in 21 project companies, freeing up $18.2 million of capital for new investments. Loan repayments, including prepayments, amounted to $82.2 million at the end of the year. Total disbursements during the year amounted to $151.1 million.

As a matter of good risk management, ADB sets aside a general provision of 8% of the total outstanding healthy portfolio, excluding projects with specific provisions and investments that are marked-to-market. The general provision as of 31 December 2004 was approximately $44.5 million with the total specific provision at $89.8 million. The loss reserve ratio as a percentage of total outstanding portfolio was at 16.7%.

ADB recorded revenues of $67.7 million during the year from its private sector operations. Approximately $31.3 million wererealized capital gains, including recoveries from a total of 21 projects sold/redeemed fully or partially. Cash dividends received from various projects amounted to $10.5 million. Interest income was recorded at $23.2 million in 2004. Fees and other income from loans were at $2.7 million at the end of 2004.

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