New ADB partnership will make sustainable infrastructure bankable

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Wind turbines on a coastline

Asian Development Bank, HSBC, Temasek and Clifford Capital Holdings agree a deal to strengthen private investment in renewables, clean transport and water and waste management.

The Asian Development Bank (ADB), HSBC, Temasek, and Clifford Capital Holdings have created a new debt financing platform that will boost private investment in sustainable infrastructure projects in Asia.

The new platform will have an initial focus on Southeast Asia and aims to turn projects on the margins of bankability into fully bankable investments. It will do this by providing concessional capital and addressing policy and regulatory constraints that hamper private investments in sustainable infrastructure.

The four partners’ initial focus will be on clean transport, renewable energy, energy storage, and water and waste management. Additional areas such as climate adaptation, agriculture and technology-led solutions could be included in the future, as could a wider geographic focus than South East Asia.

ADB vice president Ahmed M. Saeed explained that: “ADB will provide technical assistance in project development and sector reforms and work with our partners to use blended finance and other risk mitigation solutions to mobilise sustainable infrastructure financing across Asia.”

The developing parts of Asia need to invest $1.7 trillion per year between 2016 and 2030 to maintain growth, end poverty and address climate change. The public sector has financed most of Asia’s infrastructure projects previously but there are concerns it cannot meet the rising demand in the region. As a result, governments are doing more to encourage the private sector to invest in infrastructure.

This has presented a challenge, with up to two thirds of Asia’s infrastructure projects not considered bankable. Many projects, however, are ‘marginally bankable’, and so can become bankable with relatively practical interventions that include supporting capability, policy, and economic issues that limit a project’s ability to attract commercial financing.