The Asian Development Bank has set up a $625 million private equity fund focused exclusively on infrastructure projects in the Philippines.

The Philippine Investment Alliance for Infrastructure (PINAI) fund, the first of its kind in the country, will invest in Philippine core infrastructure assets with an initial focus on existing projects that need expansion or rehabilitation.

The fund will also be in a position to support the development of critical infrastructure projects from the ground up.

PINAI was conceptualized and designed by ADB, which also structured the fund and mobilized the investment capital for it.

ADB will co-own PINAI along with state-owned pension fund Government Service Insurance System (GSIS), Dutch pension fund asset manager APG, and the Macquarie Group.

The fund will focus on several infrastructure projects: transport (toll roads, ports, and mass transit), energy (power, oil and gas, and renewable energy), water (water and sanitation), and social areas (education and health).

ADB has also committed to providing assistance in catalyzing private investment, knowledge sharing, and raising standards for corporate governance and safeguards.

Investment spur

Philip Erquiaga, director-general for the bank's Private Sector Operations Department, said the fund may be instrumental in reducing the Philippine infrastructure funding gap.

“Apart from our direct equity investment, ADB’s participation can help mobilize additional investment in the Philippines from top-tier international partners, foster competition in domestic infrastructure finance, and establish a secondary market for well-performing infrastructure assets,” he said.

For APG, PINAI is "an excellent investment opportunity.

"[W]e expect it to enjoy an early mover advantage and to generate attractive risk-adjusted returns for our clients,” Hans-Martin Aerts, head of Infrastructure Asia at APG Asset Management in Hong Kong, said in a statement.

ADB expressed hope that the success of the PINAI fund will prompt more private equity funds that will catalyze additional foreign capital into the country, and further the development of domestic capital markets.

According to the Philippine Development Plan, around 12 percent of the country’s $120-billion investment requirements has to come from the private sector. PINAI will target five to 10 investments of approximately $50 million to $125 million each for portfolio diversification.

PINAI will be managed by Macquarie Infrastructure and Real Assets, the world's largest infrastructure fund manager. — BM/VS, GMA News