Impact investing gains ground in Asia
Published Sep 10, 2025 05:14 pm
HONG KONG — Impact investing and blended finance are gaining traction in Asia, but experts say the region must tackle structural gaps and mobilize more private capital to meet its development needs.
During the impact investing day of the AVPN Global Conference 2025 on Wednesday, Sept. 10, multilateral and investment banks underscored both the opportunities and hurdles in advancing sustainable investments.
The global impact investing market has surpassed $1.6 trillion in assets under management (AUM), with a compounded annual growth rate (CAGR) of more than 20 percent annually, as institutional investors increasingly embed impact in their core portfolios, noted Vikas Arora, chief impact investing and blended finance officer at Singapore-based AVPN Ltd., the largest network of social investors in Asia.
Arora stressed the potential of catalytic capital to de-risk deals and attract private investments, while blended finance is seen to multiply the effect of public and philanthropic funds.
“The future of impact investing in Asia will not be built by a single actor or a single deal. It will be built by all of us working together as a connected ecosystem,” Arora said.
Bhargav Dasgupta, vice president for market solutions at the Manila-based multilateral lender Asian Development Bank (ADB), emphasized the need to involve the private sector more deeply in financing development.
“Traditionally, we’ve been partners to developing member countries (DMCs) in this region, about 40 of them, and a lot of our lending has been to the sovereign side of the business. But what we are now doing... we are trying to shift a lot more while we continue to finance sovereigns, we shift to the non-sovereign side,” he said.
“Of all the financing that we do, 40 percent of those projects for the sovereign side have to have a private-sector development plan,” he added.
He said the ADB’s approach to financing projects include avoiding crowding out the private sector, focusing instead on deals that are difficult to finance, long term in nature, or located in markets with low credit appetite, where blended finance can help make projects bankable.
Janette Hall, director at the investment funds and special initiatives division of the private-sector operations department at the ADB, said that “what will be really critical in impact investing is blended finance, particularly concessional equity,” noting that it “can take in the form of first loss” and “could also be used as an incentive structure.”
Hall said that the ADB deploys about $300 million each year in its private-equity funding business, while it manages $1.5 billion in concessional financing, largely debt and backed by the governments of its developed member countries.
She noted that the ADB invests in both early-stage and established platforms, using a portfolio approach to achieve impact and returns.
However, “the infrastructure investment gap in Asia is about $1.5 trillion or $1.7 trillion, and MDBs [multilateral development banks], even collectively, will not be able to meet that just on our own balance sheets,” she said.
Kim-See Lim, chief investment officer (CIO) for region one public sector and global financial institutions and funds at the Beijing-based Asian Infrastructure Investment Bank (AIIB), said infrastructure will remain a cornerstone in the region’s development.
“We believe infrastructure investment and sustainable infrastructure investment is the foundation for lifting livelihoods and creating inclusive prosperity,” she said.
According to her, since it was founded in 2016, the AIIB has already approved more than $62 billion in investments across 300 projects in 38 countries.
Kamran Khan, head of sustainable finance for Asia-Pacific, Middle East, and Africa at investment banking giant Deutsche Bank, underscored that “impact investment is different from charity.”
Khan advised fund managers to identify beneficiaries, products, and buyers to ensure sustainable impact investment.
“You have to first identify who are your beneficiaries. You have to then identify how are you going to help and how will you measure that you have helped them,” he said.
“Data or lack of data should not restrict the impact activity you’re planning... It is your job to create that data,” he added.
Khan said that Deutsche Bank does “roughly about 100 billion euros of business in sustainable finance each year” and manages between 130 and 250 such transactions annually in the Asia-Pacific region.