Manila, Philippines (BBN)– The Asian Development Bank (ADB) is investing up to $20 million for its first-ever investment in a private equity fund solely focused on supporting the development of water-related infrastructure in the region.
ADB’s Board of Directors approved the equity investment in the Asia Water Fund which will invest in water and wastewater assets in the People’s Republic of China (PRC) and across Southeast Asia, an ADB announcement said on Wednesday.
Fresh water stocks around the world are under siege from growing population, industrialization and urbanization, changing food consumption patterns, pollution and climate change. In Asia, about half a billion people still lack access to potable water and 1.8 billion are without access to decent sanitation.
With global demand for water expected to double every 20 years, there is a critical need for new infrastructure. ADB has estimated that about $8 billion a year is needed to meet the target for safe drinking water in Asia and the Pacific over the next decade.
The fund, which will be owned by a subsidiary of the AmInvestment Group with a more than 24-year track record of private equity investment, is targeting investments in municipal, industrial and rural water and wastewater treatment plants, and water rehabilitation. About 70 percent of its portfolio will be in the PRC, and the rest in Southeast Asia.
The target fund size is $100 million, with an anticipated first closing of $40 million this year. It will inject around $5 million to $10 million per investment, according to the announcement.
ADB’s investment will be kept at a level which ensures it does not exceed a 25 percent stake in the fund, or become the largest stakeholder. The International Finance Corp. has also committed to invest up to $20 million. The fund will have a 10-year life, with two 1-year extensions for divestment.
BBN/SI/AD-11:58 pm (BST)