ADFIAP Finance & Investment Center implementation framework approved

The ADFIAP Board of Directors, meeting in Kuala Lumpur (please see related story), has approved the implementation framework of the ADFIAP Finance & Investment Centre (AFIC) envisioned to serve as a hub for business cooperation activities between ADFIAP members from both developed and developing economies.

In the past, ADFIAP members have expressed the desire to leverage the resources available within the ADFIAP network into business cooperation opportunities that would meet the strategic needs of members over a wide spectrum of economic environments. Bringing these opportunities into fruition would provide reality content to defined modalities for development and international collaboration while adding sustainable financial vibrancy to ADFIAP’s operations. On one hand, emerging economies represented by ADFIAP members have recurring need for financial, commercial and technical resources to apply to specific projects or undertakings. On the other, more developed economies and international organizations likewise represented in the ADFIAP membership have the counterpart financial, commercial and technical resources. Historically, these distinct sets of needs and available resources within the ADFIAP membership have developed along parallel paths without any cross-fertilization.

There is a wide array of high-impact opportunities of potential interest in emerging countries with ADFIAP representation. These opportunities fall into two time frames: (a) transactional or quick-gestation projects and (b) projects with a long gestation period. Transactional or quick-gestation projects include, for example, acquisition of a physical earning asset (e.g., a profitable tourist hotel), purchase of a physical asset with a great potential for development (e.g., real estate property), acquisition of controlling interest in an ongoing enterprise, equity and/or debt funding for a growth-oriented company, and the like.

Projects with a long gestation period include such undertakings as infrastructure projects and restructuring of companies. However, the financial packaging of these long-gestation projects could be short in duration and would be of potential interest. Within the foreseeable future, only the transactional or quick-gestation projects would probably be of interest.

Through AFIC, the ADFIAP Secretariat could perform three interrelated functions: (1) actively identifying potentially-collaborative projects based on indications submitted by members in emerging economies; (2) lining up informally allocated investment/funding from members in more developed economies; and (3) taking an active role, together with an independent investment banking professional or firm, in merging the complementary needs of a given member from an emerging economy from a matched member/s from more developed economies.

Once a candidate project has been identified and preliminarily presented to the counterpart member/s, both the member originating the project and the member/s expressing interest in resource supply could provide seed funding to cover out-of-pocket expenses to be incurred by the ADFIAP Secretariat and the investment banking professional or firm. The latter would essentially be working on a contingency remuneration basis.

The next step is to develop the implementing guidelines for AFIC and to build a database within the Secretariat.