2017 Case Studies: Infrastructure

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2017 Case Studies: Infrastructure REG: ASEAN Distributed Power (Phase 1 and Phase 2) Engineers inspecting a wind turbine installation Client: B. Grimm Power Public Company Limited (B.

1 2017 Case Studies: Infrastructure REG: ASEAN Distributed Power (Phase 1 and Phase 2) Engineers inspecting a wind turbine installation Client: B. Grimm Power Public Company Limited (B. Grimm) ADB Assistance: $75 million equity; $20 million concessional loan from the Canadian Climate Fund for the Private Sector in Asia (CFPS); $235 million loan in dollars or in baht B. Grimm is a major player in Thailand s small power producer segment. It owns and operates distributed gas-fired cogeneration and renewable power plants. To finance its next phase of rapid growth, B. Grimm has raised equity capital through an initial public offering (IPO) and ADB participated in the IPO as a key anchor investor. Proceeds from the IPO and ADB/CFPS loans will be used to construct new distributed and utility-scale renewable power, gas-fired power, energy storage, and associated infrastructure, mainly in the ASEAN countries. Support B. Grimm in diversifying and expanding its renewable energy portfolio in the ASEAN region, particularly distributed power plants. ADB s participation in the IPO will not only provide direct financing but also help attract its third-party investors and increase confidence in B. Grimm s future access to capital markets. The countries covered have only recently begun to develop distributed renewable power options, where developers face a range of technical and regulatory challenges. The concessional loan from CFPS will help to demonstrate a track record of successful financing and encourage private sector developers to take on the higher risk associated with such projects. Approval Dates: 17 May 2017 for Phase 1, and 29 September 2017 for Phase 2 Commitment Date: 16 June 2017 for Phase 1; 23 February 2018 for Phase 2

2017 Case Studies: Infrastructure SAM: Solar Power Development Solar panels installation at the Faleolo International Airport in Apia, Samoa Clients: Jarcon Pty Limited; Sun Pacific Energy Limited

2 2017 Case Studies: Infrastructure SAM: Solar Power Development Solar panels installation at the Faleolo International Airport in Apia, Samoa Clients: Jarcon Pty Limited; Sun Pacific Energy Limited (SPEL) ADB Assistance: $2 million loan; $1 million loan from the Canadian Climate Fund for the Private Sector in Asia (CFPS) Jarcon is an Australian company with 20 years of experience in small solar photovoltaic systems for residential and commercial customers in Australia. Jarcon set up SPEL to construct and operate a solar farm in Samoa. With a current capacity of 2.2 megawatts (MW), this plant has been operating since 2015 and selling power to the Electric Power Corporation, the state-owned power utility. The project will expand the solar farm s capacity to 4 MW. Samoa depends heavily on imported fuel. Of the total installed capacity of 42 MW, diesel fuel accounts for over 30 MW. While three solar independent power producers are operating, renewable energy is less than affordable because of funding and structural issues. SPEL is currently the most affordable IPP, therefore an expansion of SPEL s assets will contribute to lower the final energy cost charged to consumers. This is ADB s first private sector investment in support of a renewable energy power producer in the Pacific region. ADB s long-term loan, blended with the concessional loan from CFPS, will make renewable power generation more affordable and Samoa less dependent on fossil fuels. Approval Date: 4 August 2017 Commitment Date: 18 August 2017

2017 Case Studies: Infrastructure INO: Eastern Indonesia Renewable Energy Project (Tolo Wind) Wind farm Client: The Equis Group ADB Assistance: Loan of about $120 million, in several tranches The

3 2017 Case Studies: Infrastructure INO: Eastern Indonesia Renewable Energy Project (Tolo Wind) Wind farm Client: The Equis Group ADB Assistance: Loan of about $120 million, in several tranches The Equis Group will construct and operate a wind power plant with a capacity of 72 megawatts (MW) in Jeneponto, South Sulawesi. The project will be implemented under a 30-year build operate transfer power purchase agreement with PLN, the state-owned electric utility company. Equis is one of Asia s largest independent infrastructure private equity fund managers with a strong focus on developing renewable energy. The group operates 4.7 gigawatts of renewable energy assets and is the largest renewable energy independent power producer in Asia and the Pacific. All required debt packages will be mobilized for one of the first utility-scale wind projects in Indonesia. The project will have a positive demonstration effect for the growth of the nascent renewable energy sector. ADB s long-term loan and the concessional loan from the Canadian Climate Fund for the Private Sector in Asia II will mitigate the risks associated with wind energy and help the project sponsors to address its first mover costs and disadvantages as well as overcome various technical and regulatory challenges despite the relatively low-tariff environment in Indonesia. The project will have a pivotal role in building a critical mass of first-generation renewable energy projects in Indonesia. Approval Date: 29 November 2017 Commitment Date: 6 December 2017

2017 Case Studies: Infrastructure PRC: Geothermal District Heating Project Engineer checks the operation of a power plant Clients: Arctic Green Energy Corporation Private Limited (AGE); Sinopec Green

4 2017 Case Studies: Infrastructure PRC: Geothermal District Heating Project Engineer checks the operation of a power plant Clients: Arctic Green Energy Corporation Private Limited (AGE); Sinopec Green Energy Geothermal Development Company Limited (SGE) ADB Assistance: $250 million loan A series of urban district heating systems based on geothermal energy will be constructed, or acquired and rehabilitated, and operated. ADB will finance individual subprojects, subject to defined environmental, social, development, and financial criteria. Each subproject will involve a public private partnership arrangement with a municipal government, under which SGE would have exclusive rights to develop geothermal energy resources and network infrastructure, and to deliver heat and related services to residential, commercial, and industrial end users. SGE, the world s largest geothermal district heating company by service area, is 51% owned by Sinopec Group of the People s Republic of China (PRC) and 49% by AGE, an Icelandaffiliated company incorporated in Singapore. Geothermal facilities developed by the project are expected to reduce greenhouse gas emissions by over 7 million metric tons CO 2 equivalent per year. The project will increase confidence in private sector participation in district heating through public-private partnership in the PRC and in the use of renewable energy in heating. Environmental and social standards for the geothermal industry in the PRC will improve. The portfolio approach will lower transaction costs by bundling subprojects in several cities, which are too small and time consuming to finance on a stand-alone basis. Approval Date: 14 December 2017 Target Commitment Date: March 2018

2017 Case Studies: Infrastructure ARM: Distribution Network Rehabilitation, Efficiency Improvement, and Augmentation Power transmission lines Client: Electric Networks of Armenia CJSC (ENA) ADB

5 2017 Case Studies: Infrastructure ARM: Distribution Network Rehabilitation, Efficiency Improvement, and Augmentation Power transmission lines Client: Electric Networks of Armenia CJSC (ENA) ADB Assistance: $80 million loan ENA is the sole and exclusive licensee for electricity distribution in Armenia. It is also the country s largest employer. ENA was founded in 2002 when four stated-owned regional electricity distribution companies were merged and privatized. ENA serves the entire population of Armenia. ENA has launched a 5-year investment program to (i) improve the quality of the distribution network and services of its multisite operations across the country; (ii) reduce electricity losses and operating expenses; (iii) improve technical maintenance and safety conditions; (iv) modernize the metering system; (v) rehabilitate, reinforce, and augment the distribution network; (vi) connect new customers; and (vii) introduce international standards of management and an automated control system. ADB and the European Bank for Reconstruction and Development are co-lenders for the investment program. ADB s assistance will fill a critical market gap by providing long-term funding, which is not readily available in the local market. ENA s financial stability, on which Armenia s energy sector rests, is expected to strengthen. ENA s environmental and social management will improve. Approval Date: 27 June 2017 Commitment Date : 28 July 2017

2017 Case Studies: Infrastructure SRI: Shipyard Rehabilitation and Infrastructure Shipyard in Sri Lanka Client: Walkers Colombo Shipyard (Private) Limited (WCS) ADB Assistance: $4 million loan The

6 2017 Case Studies: Infrastructure SRI: Shipyard Rehabilitation and Infrastructure Shipyard in Sri Lanka Client: Walkers Colombo Shipyard (Private) Limited (WCS) ADB Assistance: $4 million loan The project involves the development of a shipyard in Colombo, where WCS will facilitate onshore repairs and dry-docking of tugs, yachts, fishing vessels, small tankers, and general cargo carriers using a boat lift and a ship lift. The shipyard will feature a state-of-the-art 1,250- ton ship lift and transfer system (the first in the country) for dry-docking, and three multiple piers for the repair of ships up to 70 meters long, and a 50-ton boat lift. WCS is owned by Walkers Shipyards Limited, a subsidiary of MTD Walders, a Sri Lankan company engaged in civil, mechanical, and electrical engineering, pile construction, power generation, and real estate development. MTD Walkers is listed in the Colombo Stock Exchange. The shipping project in Sri Lanka, the first to cater to smaller vessels, will fill a critical gap in the market. The project is expected to strengthen environmental and social standards, improve corporate governance, and increase transparency in Sri Lanka s ship repair industry. The project will support the government in promoting the country s shipping and maritime businesses by developing a high-quality service operation to sustain the growth and maintenance of key private sector infrastructure. Approval Date: 25 September 2017 Commitment Date: 28 November 2017

2017 Case Studies: Infrastructure BAN: Reliance Bangladesh Liquefied Natural Gas and Power Project Power transmission lines in Bangladesh Client: Reliance Power Limited (RPL) ADB Assistance: $253

7 2017 Case Studies: Infrastructure BAN: Reliance Bangladesh Liquefied Natural Gas and Power Project Power transmission lines in Bangladesh Client: Reliance Power Limited (RPL) ADB Assistance: $253 million loan; $330 partial risk guarantee The project involves the construction and operation of a combined-cycle gas-fired power plant in Meghnaghat, Bangladesh, with a capacity of 718 megawatts (MW) and an offshore liquefied natural gas (LNG) import terminal. The project represents phase 1 of the integrated LNG and power project, providing RPL with a total power generation capacity of 3,000 MW. RPL is one of the four main business lines of the Reliance Group, which is the largest private sector power producer in India, operating 5,945 MW of power generation capacity in India. Reliance is the first of several Indian companies to pursue activities aligned with efforts of both governments to increase Indian investments in Bangladesh. Long-term debt and ADB s PRG are being provided to mobilize commercial banks, many of which will be lending for the first time in Bangladesh. The project s environmental, social, and corporate governance standards are expected to improve. With increased investor and lender confidence, the project will be more likely to be replicated elsewhere. Approval Date: 1 December 2017 Target Commitment Date: To be determined

2017 Case Studies: Infrastructure KAZ: Restructuring and Transformation Project Samruk-Energy control room Client: JSC Samruk-Energy ADB Assistance: $120 million loan equivalent in tenge JSC

It owns 31% of Kazakhstan s installed generation capacity.

8 2017 Case Studies: Infrastructure KAZ: Restructuring and Transformation Project Samruk-Energy control room Client: JSC Samruk-Energy ADB Assistance: $120 million loan equivalent in tenge JSC Samruk-Energy, wholly owned by the sovereign wealth fund and joint-stock company Samruk-Kazyna in Kazakhstan, is the country s largest power generation company. It owns 31% of Kazakhstan s installed generation capacity. In 2015, the company adopted a long term strategy of introducing new technologies, expanding the use of renewable energy, and doubling shareholder value, but several macroeconomic challenges have slowed down implementation. As part of the government s privatization plan, the company also intends to go for an initial public offering (IPO). ADB financing will support JSC Samruk-Energy s overall business restructuring and transformation plan to (i) reduce foreign exchange risk, (ii) improve operating efficiency, and (iii) identify opportunities in renewable energy to attract prospective investors. This transaction will be ADB s first nonsovereign transaction with a state-owned enterprise in Kazakhstan. ADB is also providing technical assistance to support the restructuring process. The European Bank for Reconstruction and Development is providing cofinancing. ADB s long-term tenge financing will reduce JSC Samruk-Energy s foreign exchange debt and free up resources for future development and preparations for the upcoming initial public offering. Approval Date: 15 December 2017 Target Commitment Date: To be determined

2017 Case Studies: Financial Sector REG: CreditAccess Asia Bina Artha Ventura s Investment Officer leads microfinance joint-liability group meeting Client: CreditAccess Asia (CAA) ADB Assistance: $50

9 2017 Case Studies: Financial Sector REG: CreditAccess Asia Bina Artha Ventura s Investment Officer leads microfinance joint-liability group meeting Client: CreditAccess Asia (CAA) ADB Assistance: $50 million equity CAA, a holding company based in Amsterdam, operates microfinance institutions across Asia, serving about 1.8 million clients, 99.8% of whom are women. It has invested in Grameen Koota in India, Bina Artha Ventura in Indonesia, and One Puhunan in the Philippines. CAA will use the ADB funds to capitalize these subsidiaries and support their growth. Through CAA s microfinance holding company model, ADB will support financial inclusion across several markets where access to finance is severely restricted. ADB will also provide capacity-building technical assistance of up to $500,000 to support CAA s institutional strengthening, involving, among others, the rollout of strategic information technology projects, including data mining and cashless processes. The project will promote financial sector development and financial inclusion. ADB will support inclusive growth as a strategic shareholder. The project will strengthen the capital adequacy of CAA s subsidiaries. Expert advice provided during the project will help CAA prepare a gender action plan and serve women client s needs more effectively. Approval Date: 21 February 2017 Commitment Date: 16 March 2017

2017 Case Studies: Financial Sector ARM: Strengthening the Banking Sector for Financial Inclusion Ameriabank customer service area Client: Ameriabank CJSC (AMB) ADB Assistance: $30 million equity;

10 2017 Case Studies: Financial Sector ARM: Strengthening the Banking Sector for Financial Inclusion Ameriabank customer service area Client: Ameriabank CJSC (AMB) ADB Assistance: $30 million equity; $30 million loan in dollars or in dram Access to finance in Armenia is problematic, particularly for small and medium enterprises (SMEs). Fifty percent of Armenia s 130,000 SMEs have no access to finance and this figure rises to 60% 70% in the rural areas. Some banks have begun targeting this segment because of rising demand and higher yields, coupled with the banks improved understanding of SMEs. AMB is one such bank and has been identified as a strong partner for ADB in improving access to finance in the country. AMB is the largest bank in Armenia in terms of assets and holds about 17% of total assets. It primarily serves corporate customers, which account for 75% of its portfolio; SMEs and retail customers make up the rest. In recent years, AMB has shifted toward a greater emphasis on SME lending. AMB has conducted detailed market analyses and plans to roll out products tailored to SME needs. ADB s loan and equity will assist in the expansion of AMB s SME lending. ADB will also provide technical assistance of up to $1 million to support digital banking, information technology systems, and risk management investments. ADB support will allow AMB to expand its lending and new product offerings to SMEs, thus, promoting overall economic growth, job creation, and diversification. Critically needed long-term, local-currency funding will be provided in the absence of well-developed capital markets. ADB support will fund AMB s capital requirements for FY2018 and draw other investors to AMB s planned initial public offering. Approval Date: 27 September 2017 Commitment Date: 22 January 2018

2017 Case Studies: Financial Sector VIE: Expanding Micro, Small, and Medium Enterprise Lending Project Selling coffee beans at a Vietnamese market Client: An Binh Commercial Joint Stock Bank (ABB)

11 2017 Case Studies: Financial Sector VIE: Expanding Micro, Small, and Medium Enterprise Lending Project Selling coffee beans at a Vietnamese market Client: An Binh Commercial Joint Stock Bank (ABB) ADB Assistance: $100 million loan ABB is a medium-sized, joint-stock commercial bank in Viet Nam, currently the country s 17th largest bank in terms of total assets. With the assistance of its primary shareholders, Maybank and IFC, ABB has prioritized the development of its micro, small, and medium enterprise (MSME) financing business line, with a particular focus on women-led MSMEs, seeing opportunity in providing needed financial products and services to this underserved segment. The project will also contribute to enterprise development by providing access to finance to support working capital and investment needs, as well as to broader economic growth in Viet Nam through job creation. The project will support the growth of MSMEs, many of which are owned by women, and the development of Viet Nam s missing middle. It will provide access to longer-tenor debt, which will assist ABB in balancing its asset liability maturity profile better, as well as in diversifying its funding sources and complying with new Central Bank regulatory guidelines. Approval Date: 11 December 2017 Target Commitment Date: To be determined

2017 Case Studies: Financial Sector REG: Microfinance Risk Participation and Guarantee Program SVCL client working at her handloom mill ADB Assistance: Additional limit of $100 million approved for

12 2017 Case Studies: Financial Sector REG: Microfinance Risk Participation and Guarantee Program SVCL client working at her handloom mill ADB Assistance: Additional limit of $100 million approved for the program, increasing the total limit to $340 million The additional limit will support the expansion of the program into new countries and a major change in scope to broaden product offerings and facilitate market innovation. The major change in scope will (i) alter the eligibility criteria for partner financial institutions, (ii) widen the range of products to be guaranteed or risk participated in on an unfunded basis, and (iii) extend the permissible tenor of ADB s credit enhancement under the program to a maximum of 5 years. The program currently supports 20 microfinance institutions in Bangladesh, India, and Indonesia. It has provided $ million in new local-currency loans to over 3.49 million borrowers, of which more than 90% are women. Low-income and women borrowers will have better access to finance. Local-currency loans will become more accessible and capital markets will develop with ADB s support. The assistance will catalyze private sector financing. Approval Dates: 13 December 2010 (original program); 13 December 2017 (this increase)

2017 Case Studies: Private Equity REG: OrbiMed Asia Partners III Free cataract operations for poor patients Client: OrbiMed Asia Partners III, LP (OAP III) ADB Assistance: $60 million equity A

13 2017 Case Studies: Private Equity REG: OrbiMed Asia Partners III Free cataract operations for poor patients Client: OrbiMed Asia Partners III, LP (OAP III) ADB Assistance: $60 million equity A private equity fund with a target capitalization of $500 million. OAP III intends to invest in heath-care companies operating in the People s Republic of China, India, and Southeast Asia. Through the investments, it looks forward to (i) improving affordability and quality in the delivery of health care products and services in Asia, (ii) increasing the efficiency and accessibility of health care services outside the major urban cities in Asia, and (iii) leveraging Asia s cost advantage and local strengths in the region and globally. OAP III will be managed by an affiliate of OrbiMed Advisors LLC, the world s largest investment firm dedicated to health care. ADB is an existing investor in OrbiMed Asia Partners II, LP Fund (OAP II), having committed $60 million to the $325 million fund in ADB s investment in OAP III is a continuation of its strategy of increasing nonsovereign operations in health care. ADB s continued support as OrbiMed s Asia-based anchor investor will help OAP III reach its target size, while validating the social and development impact and the strong financial return prospects. ADB s presence as a major investor in OAP III obligates the general partner to continue to adopt an environmental and social management system acceptable to ADB and report on development indicators. ADB can potentially mobilize additional financing from third-party sources, and make technical assistance funding available as required. Approval Date: 25 August 2017 Commitment Date: 31 August 2017

2017 Case Studies: Private Equity IND: True North Fund VI LLP Processing facility in India Client: True North Fund VI LLP (True North VI) ADB Assistance: $50 million equity An India-focused private

14 2017 Case Studies: Private Equity IND: True North Fund VI LLP Processing facility in India Client: True North Fund VI LLP (True North VI) ADB Assistance: $50 million equity An India-focused private equity fund with a target capitalization of $900 million will be set up to provide growth capital to private companies in the financial services, health care, consumer, and technology sectors. The fund will be managed by True North VI, one of India s leading and well-regarded private equity fund managers. Through this fund, ADB will provide equity capital to a portfolio of established companies in India to help them reach their next phase of growth. This growth is expected to generate employment, increase the government s tax revenues, and provide impetus for the overall growth of India s private sector. The project will enhance and expand the environmental and social policies and screening tools of True North VI. It will expand True North s anti money laundering, anticorruption, and integrity framework, and improve its ability to screen potential investors in True North VI and the sellers and buyers of portfolio investments. The investor base will be diversified and balanced. Direct financing may be provided to the fund s investee companies and additional financing may be mobilized from third-party sources. Approval Date: 18 December 2017 Commitment Date: 22 December 2017

2017 Case Studies: Agribusiness PRC: Environmentally Sustainable Agriculture Input Distribution Kingfarm provides agri services to PRC vineyard Client: Kingenta Ecological Engineering Group

15 2017 Case Studies: Agribusiness PRC: Environmentally Sustainable Agriculture Input Distribution Kingfarm provides agri services to PRC vineyard Client: Kingenta Ecological Engineering Group (Kingenta) ADB Assistance: $50 million loan and $30 million equity Kingenta is the largest compound and specialty fertilizer producer and supplier in the People s Republic of China (PRC). It is listed in the Shenzhen Stock Exchange. The recent establishment of Kingfarm is foreseen to transform Kingenta into an integrated solutions provider to farmers. Kingfarm will be capitalized with total equity of $520 million. The ADB assistance will enable Kingfarm to set up 300 crop production centers and upgrade 10 associated fertilizer plants. With these facilities, Kingfarm intends to provide high-efficiency compound and specialty fertilizers and other environmentally sustainable agricultural inputs and services to around 3 million smallholder farmers in eight provinces in the PRC (including six poor, noncoastal provinces). This is ADB s first nonsovereign assistance to an agricultural input and service provider. ADB is providing long-term patient capital that is not available from commercial banks or other investors. With ADB s help, Kingfarm s environmental and social standards are expected to improve through the application of international safeguard standards. Approval Date: 7 September 2017 Commitment Date: 31 January 2018

2017 Case Studies: Agribusiness REG: Agricultural Value Chain Development Coffee farmer in Viet Nam Client: Olam International Limited (Olam) ADB Assistance: $100 million loan in dollars and in

16 2017 Case Studies: Agribusiness REG: Agricultural Value Chain Development Coffee farmer in Viet Nam Client: Olam International Limited (Olam) ADB Assistance: $100 million loan in dollars and in rupiah Olam is a leading agribusiness company with a presence in 70 countries. It differentiates itself by focusing on niche commodities and businesses, buying from growers and village level agents at the farm gate, and providing value-added solutions and services (e.g., traceability guarantees to customers). ADB s loan will fund Olam s expansion plan over the period, which includes large midstream projects and permanent working capital investments for smallholder farmer supply in Indonesia, Papua New Guinea, Timor-Leste, and Viet Nam. Technical assistance of $3.0 million will support about 13,000 smallholder coffee farmers in the four countries. The Japan International Cooperation Agency will provide a parallel loan of $75 million. Olam s environmental and social standards are expected to improve through the application of international safeguard standards. The ADB assistance will allow Olam to undertake different projects in several countries at the same time. Approval Date: 27 October 2017 Target Commitment Date: Q1 2018

ASIAN DEVELOPMENT BANK Private Sector Operations Department. Business Opportunity Fair - Vienna November 2018

ASIAN DEVELOPMENT BANK Private Sector Operations Department Business Opportunity Fair - Vienna November 2018 Differences between Sovereign and Non-Sovereign Operations Resources, Portfolios, and Programs