In a memorandum of understanding the ADB signed with HSBC, Temasek, and Clifford Capital Holdings, a debt financing platform has been established to boost the commercial development of sustainable infrastructure projects in Asia. It will initially start with activities in Southeast Asia.
The primary objective of the platform is to bring marginally bankable projects to market by leveraging them through concessional capital and addressing policy and regulatory constraints that hinder private investments in sustainable infrastructure. Marginally bankable projects typically face a range of barriers to accessing private-sector finance. These may include a variety of capability, policy, and economic issues which can impact a project’s ability to attract commercial financing. The partners’ initial focus will be on clean transport, renewable energy and energy storage, and water and waste management. Additional areas such as climate adaptation, agriculture and land use, and technology-led solutions could be included in the future.
Developing Asia needs to invest $26 trillion, or $1.7 trillion a year, from 2016 to 2030 to maintain its growth momentum, end poverty, and address climate change. Southeast Asia is one of the most vulnerable regions to climate change. The public sector, which has been the main source of funding cannot meet the increasing demand in the region; and the private sector is being called upon to fill the gap. However, up to 65% of Asia’s infrastructure projects are not considered bankable, and it requires significant upfront costs and time on project preparation to get the projects to a bankable stage.
The platform aims to buoy marginally bankable projects. After an initial feasibility assessment, it is envisaged that HSBC and Temasek will be equity partners in the platform, and ADB and Clifford Capital Holdings will be strategic partners.
The platform will apply international best practices for environmental, social, and governance, in line with safeguards standards set by international financial institutions. It may also consider emerging initiatives such as the FAST-Infra Sustainable Infrastructure Label.