Asia Impact Investor ABC World Asia Sees Growing Opportunities in China; Extends China Footprint With Latest Investment To Drive Digital and Financial Inclusion
Reflecting its upbeat outlook on the potential for impact investing in China, impact investing private equity fund ABC World Asia recently increased its investment in China's CD Finance Management Co. Ltd. (“CD Finance”).
Singapore-headquartered ABC World Asia added CD Finance to its portfolio last year. The follow-on investment took place in June with the fund's participation in CD Finance's USD165M financing round, ABC World Asia said in a press release.
CD Finance is China's largest rural service institution originally set up to provide microfinance services to the rural population. Over 90% of loans disbursed by CD Finance are used for raising livestock, farming, and other agricultural activities. The company is now harnessing digitally enabled solutions to expand beyond lending into other value-added activities that will further support the needs of their rural customer base. These include much needed services among the rural communities, such as insurance, agricultural supply procurement, e-commerce and technical training.
Tan Shao Ming, Managing Director of ABC World Asia who led the investment in CD Finance, added, “Digital and financial inclusion is an important area of focus for us. With its rapid economic growth and large population, China offers vast opportunities for innovative enterprises to create significant impact and inclusion through the adoption of technology. The Chinese government is also focusing on rural revitalisation and enacting policies designed to improve the livelihoods of the rural communities. We see great potential in this nationwide initiative, and will continue to seek out areas in which our investments can help companies generate positive impact on the society and economy.”
While multiple challenges still exist for impact investing, such as difficulties in collecting and processing relevant data to help assess impact, ABC World Asia believes the outlook for impact investing is positive. The fund applies a rigorous and evidence-based approach towards impact evaluation and assessment. Opportunities are put through an investment framework that assesses impact performance as well as financial returns, with equal weightage assigned to both metrics. In 2020, the fund reviewed over 200 opportunities from a bottom-up basis and invested in five companies.
David Heng, Founder and CEO of ABC World Asia, concluded, “There is a growing consciousness among Chinese businesses to innovate for public good. Spurred by private capital seeking to foster positive impact, as well as government policies that encourage responsible, green, and sustainable business practices, we are seeing many investment opportunities in China that can potentially generate positive social or environment impact. For example, China has announced the goal to have its carbon emissions peak by 2030 before achieving carbon neutrality by 2060. This push for green development will create opportunities for private capital to do good, by investing in well-intentioned companies operating across the entire supply chain.”
ABC World Asia's investment into China's CD Finance comes on the back of its investment in Vietnam dental system operator Kim Dental in February this year. To-date the private equity fund dedicated to impact investing in Asia has deployed well over S$98M across five companies from its initial S$405M fund. The fund launched its inaugural Impact Report in March this year. The size of global impact investments increased by about 40 percent from 2019 to 2020, and was estimated at US$715 billion in April last year, according to the Global Impact Investing Network.
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