Asian Development Bank (ADB) is investing up to $25m in a new fund designed to support the growth of small- and medium-sized enterprises (SMEs) in ASEAN countries and the People’s Republic of China (PRC).
The ASEAN China Investment Fund II, which is seeking to raise $250m in total capital, plans to invest in companies that will benefit from increasing trade between the ASEAN bloc and the PRC.
ADB’s investment, which will be capped at 25% of the fund’s share capital, will help leverage interest from other investors to raise money in the capital markets in the wake of the global economic crisis. It follows ADB funding of $15m in 2004 for the similarly targeted ASEAN China Investment Fund.
The fund will make minority equity and equity-related investments of $5m to $20m. The investments will be aimed at companies which need capital to finance expansions, acquisitions, joint ventures, and restructuring, and will benefit from regional trade. The investment allocations target is 50% in the ASEAN region and 50% in the PRC.
The fund will have an eight-year life from final closing, and will aim to exit investments over an average period of three to five years. It will be managed by UOB Capital Partners and advised by UOB Venture Management, both subsidiaries of United Overseas Bank (UOB). UOB is the sponsor and lead investor, with a capital commitment of $30m.
Robert van Zwieten, director of private sector operations department at ADB, said: “ADB’s investment in the fund is intended, in the long term, to help increase regional trade, economic growth and private sector development in Asia.”