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Private Sector (Nonsovereign) Financing

ADB focuses on projects that help promote private investments in the region that will have significant development impact and will lead to accelerated, sustainable, and inclusive growth.

Core Sectors and Focus Areas

In its private sector operations, ADB builds on its existing strengths in the infrastructure sector, financial sectors and capital markets, and agribusiness sector, and seeks to assist private sector projects and companies in these three areas in developing member countries (DMCs).

Infrastructure

Infrastructure sector

In infrastructure and project finance, ADB's Private Sector Operations Department (PSOD) is focused on the following core sectors of operation:

  • energy (e.g., power, generation transmission and distribution, renewable power);
  • transport (e.g., roads, ports, railways, airports);
  • telecommunications;
  • water (e.g., water supply and waste treatment); and
  • urban infrastructure.

Sector-specific engagements are guided by ADB's strategic agenda at the country level, which in turn reflects client demand. ADB provides assistance in the form of equity, loans, and guarantees, as well as B loans (complementary financing scheme) for infrastructure projects. ADB can also assist in arranging parallel financing. We support subsovereign, municipal, corporate, and privatization of infrastructure projects. ADB also provides financing for existing infrastructure projects that need to upgrade or expand their facilities to achieve operating efficiencies. Financial restructuring of existing infrastructure projects that were financed with debt denominated in foreign currency and/or used short-term facilities may also be considered for assistance by ADB. PSOD is also encouraging and financing "clean" and renewable technologies appropriate for local settings.

The Infrastructure Finance Division 1 (PSIF1) undertakes projects in Central and West Asia and South Asia while the Infrastructure Finance Division 2 (PSIF2) covers East Asia, the Pacific, and Southeast Asia.

Financial Sectors and Capital Markets

Financial Sectors and Capital Markets 1 / Funds (including but not limited to private equity funds, venture capital funds, etc.)2

ADB supports the development of financial sectors and capital markets to facilitate the mobilization of foreign and domestic capital to productive sectors of the economy.

We fund or facilitate funding of financial institutions so they can, in turn, finance small and medium-sized enterprises, microenterprises, housing mortgages, and other underserved sectors that ADB may not be able to assist directly. Where needed, we help create and build sustainable financial institutions, usually in partnership with like-minded strategic investors.

ADB provides assistance in the form of equity, loans, and guarantees the following private sector institutions:

  • Banks;
  • Capital market institutions, such as stock and fixed income exchanges, central depositories, and rating agencies;
  • Leasing or nonbank financial institutions;
  • Insurance companies; and
  • Funds including private equity funds, venture capital funds, mutual funds, distressed asset funds, infrastructure funds, and thematic funds (i.e., environment funds).

We are also keen to catalyze complex capital market solutions and other innovative approaches to financing challenges, including the emerging structured finance and securitization market.

Through its work with financial intermediaries, ADB's private sector operations focus on expanding access to finance, particularly among lower income groups (microfinance and housing finance) and micro-, small, and medium-sized enterprises, as well as on infrastructure development and climate change finance.

We also support trade finance activities through ADB’s Trade Finance Program (TFP) and Supply Chain Finance Program (SCFP). The TFP fills market gaps for trade finance by providing guarantees and loans to banks to support trade while the SCFP works with corporates and partner financial institutions (PFIs) to enhance access of small and medium-sized enterprises to working capital.

1 Financial sectors and capital markets (including the TFP) are under the Financial Institutions Division (PSFI) which covers all of ADB's DMCs.
2 Funds are under the Investment Funds and Special Initiatives Division (PSIS) which covers all of ADB's DMCs.

Agribusiness

Agribusiness sector

ADB supports agribusiness projects and companies across the entire food and agriculture value chain, including farm input providers, crop and livestock producers, agri-processors, packaged food producers, storage and logistics providers, and food distributors. ADB provides assistance in the form of debt and direct equity investments.

Beyond financial returns, ADB identifies, structures, and finances agribusiness projects supporting food security, food safety, local value addition, rural development, gender inclusion, reduced pollution, climate change mitigation, and climate change adaptation.

ADB works with agribusiness sponsors with strong technical and financial capabilities to ensure a successful implementation of the investment projects.

To enhance the developmental impact of the projects, ADB mobilizes commercial and donor cofinancing. When appropriate, ADB also mobilizes technical assistance grants—for example, to provide direct assistance to smallholder farmers and cooperatives engaged in the agricultural value chain supported by the project.

Health and Education

Health and Education

Education is fundamental to sustainable development. The development benefits of education extend beyond economic growth and include technological advancement, better health choices, improved civic participation and many others. Similarly, good health allows full economic participation, improves productivity and reduces poverty.

In the education sector, PSOD will focus on projects that support: (i) higher-quality, more accessible and equitable basic, secondary and tertiary education; (ii) technical and vocational education training for skills development in the formal and informal labor markets; and (iii) use of innovative approaches including PPPs and information and communications technology (ICT) for education service delivery. In the health sector, as DMCs increasingly focus on addressing affordability issues through the implementation of universal health insurance programs, PSOD will support private sector players who are expanding access to quality healthcare services. PSOD will focus on: (i) primary healthcare and basic hospital services; (ii) affordable pharmaceuticals and medical equipment; and (iii) use of PPPs to improve efficiency in the sector. PSOD will also contribute indirectly towards improving health outcomes through its financing for infrastructure sectors such as water and waste treatment.

Business

Business Development

PSOD’s Business Development Team (BDT) was created in 2018, to explore, identify, and design new financing products that contribute to the long-term project pipeline of ADB. BDT launched ADB Ventures in 2020 which invests in early-stage technology companies generating climate mitigation and adaptation impact. BDT is currently designing new developmental initiatives that focus on early-stage infrastructure projects and smaller frontier-markets.