The Asia Water Fund, a 50-50 joint venturebetween Malaysia’s AmInvestment Bank Group and Singapore water processor Konzen Group has received a $20 million backing from the Asian Development Bank (ADB), according to a statement by the Manila-based bank.
The commitment, coupled with the $20 million commited by the International Finance Corporation in April, brings the fund one step closer to a $40 million first close before the end of the year. Originally launched in 2008 with a $320 million target, the fund now has a final target of $100 million, according to the statement.
Strategically, the fund will seek deals of between $5 million to $10 million in municipal, industrial and rural water and wastewater treatment plants. The statement noted that 70 percent of the fund’s resources will be designated for China and the rest to Southeast Asia. The fund will have a 10-year life, with two 1-year extensions for divestment.
“The fund will aim to mitigate risks through geographic and sector portfolio diversification,” Shin Kim, head of private equity in ADB's private sector operations department said in the statement. He added that that the fund will seek a controlling stake in any deal it makes.
The Asia Water Fund was originally launched to address the issue of fresh water shortages in Asia brought about by growing populations, industrialisation and urbanisation, changing food consumption patterns, pollution and climate change. It is unclear when or why the decision to right-size the fund’s target size from $320 million to $100 million was made. Neither Konzen nor AmInvestment Bank commented by press time.
According to the ADB, global demand for water is expected to double every 20 years. It is estimated that about $8 billion a year is needed to meet the target for safe drinking water in Asia and the Pacific over the next decade.
“Private water investments which help alleviate Asia's impending water crisis while making a sustainable return to investors create a win-win solution for all stakeholders,” Shin said.
Konzen Group is involved in designing, supplying and installing of a variety of products used for water treatment and waste water management. It has three main operating divisions – a North Asia engineering division, a South Asia engineering division and a financial division. The first two divisions engage in business development and EPC (engineering, procurement and contracting), while the financial division engages in technology incubation, seed investment and venture capital operations.
AmInvestment provides investment banking, Islamic banking, insurance and trust services to clients in Malaysia. Its private equity division makes late-stage investments in manufacturing, business services, energy services and communications technology.