ADB invests $129m in Temasek-backed Clifford Capital Holdings

In its first investment in a local entity since setting up shop in Singapore earlier this year, the Asian Development Bank (ADB) will inject US$95 million (S$129 million) into Clifford Capital Holdings (CCH), spurring growth in the Temasek-backed company – especially in the area of sustainable infrastructure financing in Asia.

ABD will have a pro forma shareholding of 10.8 per cent once all equity capital committed has been fully deployed by 2024. It will also earn a board seat on CCH, the parties told The Business Times prior to their announcement yesterday, but declined to reveal the representative appointed to the post.

While the parties did not disclose specific projects in their pipeline, CCH’s group chief executive officer Clive Kerner said the partnership will spur its efforts in unlocking renewable energy sources such as solar and wind.

The investments comprise US$50 million from ADB and US$45 million from the Leading Asia’s Private Infrastructure Fund administered by ADB.

The fund, which provides co-financing to non-sovereign infrastructure projects at different stages of development, was established in 2016 with a US$1.5 billion capital commitment from the Japan International Cooperation Agency.

Describing the “strong alignment” between CCH and ADB’s efforts to address the infrastructure financing gap in Asia, Mr Kerner said: “Given the critical institutional role of ADB in the region and its experience in supporting tenable infrastructure development across Asia, we are confident that we have established the right partnership to complement our existing shareholders to capture new growth opportunities and generate sustainable value and long-term returns.”

Mr Mike Barrow, director-general of ADB’s private sector operations department, said the entity was attracted to invest in CCH not only because of its track record, but also the “quality of the investors already in Clifford Capital”.

“We know them very well, but being able to work even more closely through Clifford Capital with the likes of Temasek, Prudential and DBS is extremely attractive and very valuable because these are key players in the space in Asia,” he said.

Set up in 1966, the ADB is an alliance of 68 countries – 49 of which are in the Asia-Pacific – which promotes social and economic development in the region. Its Singapore office opened in March this year and looks at tackling climate change, financing and building quality infrastructure, and managing urbanisation in the region, among other priorities.

According to ADB’s estimates, developing Asia will need to invest US$1.7 trillion per year in infrastructure until 2030 to maintain its growth momentum, as well as to tackle poverty and climate change.

The Covid-19 pandemic has accelerated the transition towards sustainability, said Mr Kerner. He added that with more countries onshoring their supply chains and against the backdrop of low interest rates, infrastructure as an asset class may become increasingly attractive for investors.

The Covid-19 pandemic has accelerated the transition towards sustainability, said Clifford Capital Holdings’ group chief executive office Clive Kerner. He added that with more countries onshoring their supply chains and against the backdrop of low interest rates, infrastructure as an asset class may become increasingly attractive for investors.

Offering a more nuanced perspective, Mr Barrow noted that governments have had to divert some funding previously allocated to infrastructure for other uses in response to the pandemic.

“In some sectors, there will also be short-term changes in the overall demand and supply for infrastructure… For instance, the demand for infrastructure like toll roads or even electricity has been reduced. So I think there is a little bit of a blip,” he said.

But these markets will come back strongly, he maintained. “In fact, they will come back even more robustly because of the lag that there could be in spending on infrastructure during the pandemic, and maybe thereafter. And the gaps in financing will only increase,” he said.

“And that’s why the likes of ADB, Clifford Capital and other development institutions need to step up even more strongly as that rebound happens.”

THE BUSINESS TIMES

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