5 July 2021, Singapore – 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.
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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About ABC World Asia
ABC World Asia is a Singapore-headquartered and Asia-focused private equity fund dedicated to impact investing. We invest in companies that drive positive change by addressing the world’s most pressing challenges such as climate change, resource scarcity, and deepening inequality. Our investment themes include financial and digital inclusion, better health and education, climate and water solutions, sustainable food and agriculture, and smart and liveable cities.
We believe that investing with an impact lens demonstrates the positive power of private capital and can help to foster more innovative and resilient companies that deliver societal and environmental benefits. We are a disciplined investor with a rigorous and evidence-based impact assessment approach that aims to generate positive and measurable social or environmental outcomes, alongside a compelling risk-adjusted return for our investors.
Our investment themes are aligned with the ABC Framework for an Active Economy, a Beautiful Society, and a Clean Earth. The ABC Framework was established by Singapore investment company Temasek and builds on the ideals of the 17 Sustainable Development Goals set by the United Nations.
Our inaugural S$405 million fund includes investors such as Temasek Trust, Temasek, Pavilion Capital, Mapletree Investments, Seatown Holdings, Sembcorp Industries, and Singapore Power.
For more information, please visit www.abcworld.com.sg
The 2020 impact “Journey to Impact in Asia”, is available for download at www.abcworld.com.sg/impactreport2020