New Asia infrastructure fund attracts Japan Inc, says ADB official

August 30, 2016 7:22 AM EDT

Japan's Prime Minister Shinzo Abe addresses the Sixth Tokyo International Conference on African Development (TICAD VI) in Kenya's capital Nairobi, August 27, 2016. REUTERS/Thomas Mukoya

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By Tetsushi Kajimoto

TOKYO (Reuters) - A new Asian Development Bank fund aimed at spurring investment in Asia has drawn attention from Japanese business, a senior official said on Tuesday, a positive move towards meeting the region's infrastructure financing needs.

The Leading Asia's Private Infrastructure Fund (LEAP) was established in March by ADB and Japan International Cooperation Agency (JICA) as a follow-up to the "Partnership for Quality Infrastructure" unveiled by Prime Minister Shinzo Abe last year.

The ADB estimates Asia's infrastructure financing needs at $800 billion a year, making it crucial to tap resources from the private sector and development organizations.

Michael Barrow, director general of ADB's Private Sector Operations Department, said the new fund would help the regional lender to boost its lending and investment across Asia.

"There must have been at least a hundred-plus participants from across governments, Japanese trading companies, Japanese manufacturing companies, banks ... so very good representation of Japan Inc," he said. "There is a lot of genuine interest."

The LEAP fund is capitalized by $1.5 billion in equity from JICA and managed by Barrow's department. It has been in operational since Aug. 1.

The fund supports private-sector infrastructure transactions through public-private partnerships, joint ventures, concessions and corporate financing, while using a range of loans, equity and mezzanine instruments over a five-year investment period.

The fund will target areas such as power generation - with a particular focus on renewable energy - urban development, water, health, transport, information and communications.

"We're looking at a handful of projects. We hope that within the first half of next year we'll have at least a couple of projects," Barrow added.

Abe announced last year the Partnership for Quality Infrastructure through the establishment of a $110 billion infrastructure fund that could rival the China-led Asian Infrastructure Investment Bank.

ADB and AIIB agreed earlier this year that they would jointly finance a major new highway in Pakistan in the first co-financed project.

(Reporting by Tetsushi Kajimoto; Editing by Nick Macfie)

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