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| ADB Headquarters in Manila [PHOTO: © Eugene Alvin Villar, 2007] |
Manila: The Asian Development Bank (ADB) has approved an equity investment in a $625 million private equity fund focused exclusively on Philippine infrastructure projects – the largest and first of its kind in the country and well-timed to capitalize on various public-private partnership opportunities in the Philippines.
ADB’s investment in the Philippine Investment Alliance for Infrastructure (PINAI) fund is alongside commitments from Philippines’ state-owned pension fund Government Service Insurance System (GSIS), Dutch pension fund asset manager APG, and the Macquarie Group.
“Apart from our direct equity investment, ADB’s participation can help mobilize additional investment in the Philippines from top tier international partners, foster competition in domestic infrastructure finance, and establish a secondary market for well-performing infrastructure assets,” said Philip Erquiaga, Director General for ADB’s Private Sector Operations Department.
“We are delighted to partner with GSIS, ADB and Macquarie and play a role in reducing the Philippine infrastructure funding gap. PINAI provides for an excellent investment opportunity and we expect it to enjoy an early mover advantage and to generate attractive risk-adjusted returns for our clients: pension funds in the Netherlands with combined assets of over €300 billion (around $367 billion),” said Hans-Martin Aerts, Head of Infrastructure Asia at APG Asset Management in Hong Kong.
ADB hopes the success of the PINAI fund will also spur more private equity funds that will catalyze additional foreign capital into the country, and further the development of domestic capital markets.
“Our participation in the fund will contribute to economic growth and investors’ confidence. This will also mean enhanced returns on our investments which will redound to the greater benefit of our members and pensioners,” GSIS President and General Manager Robert G. Vergara said.
The fund will invest in Philippine core infrastructure assets with an initial focus on existing projects that need expansion or rehabilitation, but will also be in a position to support the development of critical infrastructure projects from the ground up.
According to the Philippine Development Plan, around 12% of the country’s $120 billion investment requirements need to come from the private sector. PINAI will target five to 10 investments of approximately $50 million to $125 million each to provide for portfolio diversification.