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Frequently Asked Questions
1. How does ADB help the private sector? ADB supports private sector development:
2. What are the advantages of working with ADB? Getting finance or guarantee support from ADB gives your project instant credibility with host governments, private investors and/or lenders. We have over 40 years of experience in the region, and we maintain positive relationships with a wide network of government agencies and financial institutions. We are more than a bank; we are a unique public-private institution that:
Our presence alongside private partners helps provide comfort to private investors, thus enabling us to mobilize financing for private sector projects or enterprises. Our loan maturity can be as long as 15 years, or more in some cases. 3. How does ADB mobilize capital for private enterprise? We produce financial solutions to manage the risks of investing in developing countries. Solutions may include a mixture of private and official funding sources. In providing assistance to the private sector, we use equity investments, loans, guarantees, or syndications including fronting (‘B’ loan or lender of record and guarantor of record) and non-funded risk participation arrangements to mobilize private investments. Equity may include subordinated loans, preferred stock, convertible loans, and other mezzanine financing. We generally provide or guarantee loans denominated in the major international currencies, but will increasingly use local currency financing in selected countries such as the People’s Republic of China, India, Philippines, and Thailand. Our guarantees cover risks that the private sector cannot easily absorb or manage on its own. Reducing these risks can make a crucial difference to funding. 4. What sectors of the economy does ADB focus on? We are currently focused primarily on two areas: financial sector and infrastructure. In the financial sector, we assist private financial intermediaries such as banks, non-bank financial institutions, and funds so that these institutions can, in turn, finance SMEs, micro enterprises, infrastructure facilities, mortgage finance, trade, and other underserved areas. In infrastructure, we help build physical facilities in such fields as energy (power and hydrocarbons), water supply, waste management and treatment, telecommunication, toll roads, ports, airports, and rail systems. We also finance existing infrastructure projects for upgrading or expansion to enhance their operating efficiencies. 5. How much assistance does ADB give? Our total support for any one project generally does not exceed the lesser of 25% of the total cost of the project or assets in other cases, or up to $250 million. Both of these guidelines can be reviewed as needed. Our aim is to catalyze financing from local or foreign sources, not to compete with them, thus:
If necessary, we mobilize additional debt from other banks, through parallel financing, cofinancing, or guarantees. 6. What criteria does ADB use to evaluate projects? A project must be financially viable with significant economic and social merit, and a positive development impact. We look for projects that reduce poverty, protect the environment, and improve the lives of the poor. The project's cost must be reasonable. The sharing of risks and rewards must be fair for both the country and the sponsors. We prefer to assist infrastructure projects that have been awarded through competitive bidding process. We evaluate your project's technical feasibility, market prospects, financial and economic viability, environmental soundness and commitment to best practices of corporate governance. We also consider the integrity, success record, financial resources, and competence of the project sponsors and management. Learn more about ADB's application process.
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