Catalog

	Table of Contents
p. 30 of 39 BACK | NEXT The Record Chairman’s Message Board of Directors' Report New and Revised Policies and Procedures Internal Initiatives Governing Structure Financing Operations Financial Resources Funding Overview of Operations Loans Equity Operations Cofinancing and Guarantee Operations Grants Technical Assistance Multitranche Financing Facilities Resource Transfers Private Sector Operations 2005 in Figures Management Board of Directors Operations in 2005 East and Central Asia Mekong The Pacific South Asia Southeast Asia

Financing Operations in 2005

Private Sector Operations

A total of 17 financial markets and infrastructure projects providing $821.5 million in assistance in the private sector were approved by ADB in 2005. The interventions are composed of 10 equity investments of $217.1 million, 7 loans of $536 million, a partial credit guarantee of $18.4 million, and a political risk guarantee of $50 million.

ADB’s private sector loan and equity investments mobilized funding from other sources, leveraging ADB’s own funds by almost 10 times

ADB’s loan and equity investments mobilized ADB’s private sector loan and equity investments mobilized funding from other sources, leveraging ADB’s own funds by almost 10 times funding from other sources, leveraging ADB’s own funds by almost 10 times. In 2005, ADB’s private sector operations also embarked on technical assistance for capacity building in areas such as water, trade, finance, small business and microfinance banks, development of the asset-backed securities market, and worker remittances.

ADB has undertaken strategic interventions through public-private partnerships in projects that boost a DMC’s domestic capacity to finance private sector and economic growth, an indispensable ingredient in poverty reduction. The projects improve the delivery of essential services and extend them to the poor. Although private sector operations are still and will remain in the larger DMCs, ADB continues to look at opportunities in the smaller borrowing DMCs, following the priorities identified in various regional and country strategies and programs. For example, the first and largest private sector project in the Lao People’s Democratic Republic (Lao PDR) was approved for the Nam Theun 2 Power Company Limited in 2005.

One hundred ninety-one projects with cumulative assistance of about $5 billion (inclusive of all types of interventions) have been approved since ADB commenced private sector operations in 1983. ADB’s cumulative equity and loan approvals of $3.5 billion have catalyzed a total of about $31.6 billion in funding for private sector projects, leveraging ADB’s investments by a ratio of 5.4 times. Cumulative disbursements for private sector projects have thus far amounted to $2.1 billion.

As of 31 December 2005, the overall private sector exposure amounted to about $1.7 billion, consisting of $598.2 million in equity investments, loans of $732.2 million, and guarantees of $361.7 million. ADB’s private sector exposure is largest in the infrastructure sector with a total of $820.9 million in exposure, followed by investment funds and financial institutions at $742.3 million, with exposure in all other sectors at $128.9 million.

The total private sector exposures are largely in India (17.1%), PRC (15.6%), Sri Lanka (11.5%), and Bangladesh (11.2%). Regional projects account for roughly 8.9% of the total.

Capital was freed up for new investments in the amount of $53.4 million as ADB’s equity shareholdings in 15 private companies were fully or partly divested in 2005. Loan repayments for the year, including prepayments, amounted to $54.7 million, while total disbursements amounted to $336.2 million.

While ADB constantly explores ways to improve risk management in its private sector operations, a loss provision is recorded for equity investments and loans. The loss provision, which includes impairment loss, was about $116.6 million as of 31 December 2005. The loss reserve ratio as a percentage of total outstanding portfolio was 10.8%.

Back Resource Transfers	Next 2005 in Figures