As the private equity space in Asia evolves, the Asian Development Bank (ADB) looks to back more established fund managers, as well as add venture capital funds to its portfolio.
Janette Hall, director of ADB’s private sector investment funds and special initiatives division, told DealStreetAsia in a recent interaction that due to the bank’s dual mandate of achieving both commercial and development returns, it was important to work with experienced managers, who are financially sustainable, hence creating impact.
“While in principle, supporting emerging fund managers in frontier economies and sectors is highly developmental, many of them actually generated what was less than our expected returns. It’s really hard to achieve the development impact if it’s not financially sustainable,” she said.
“That’s why it’s really important for us to partner with established fund managers with a good track record across operating cycles,” she noted.
Hall added that the ADB plans to back more venture capital funds, even as the development bank has been focusing on growth equity investments.
To date, the ADB has made over 80 fund commitments, while its current portfolio includes 36 funds with capital commitments of about $1.1 billion. It has backed managers in the region such as Southeast Asia-focused firms Northstar Group and Creador, Vietnam-based Mekong Capital, and Indian private equity firm True North.
Sector-wise, the ADB focuses on healthcare, education and financial services, while also looking at consumer services, especially in regions like South and Southeast Asia.
Hall said despite underwriting challenges induced by the pandemic, the ADB’s dual mandate has enabled it to maintain its pace of deal-making.
“Because travel restrictions have limited the ability of investors to do onsite diligence, we saw many of our co-LPs becoming much more cautious, preferring to invest in funds that are closer to home, and in more established brand names, [while] ADB’s fund mandate has been largely unaffected,” she elaborated.
Edited excerpts of the interaction with Hall:-
