Financing Asia's Next Phase of Growth

From Growth Story to Financing Story

Investors have spent much of the past two decades discussing Asia through the lens of demographics, urbanisation and GDP growth. Those themes remain relevant: McKinsey has described Asia’s rise as being driven by integration into global trade, capital, talent and innovation flows, while also noting that the region is expected to account for more than 50% of global GDP and around 40% of global consumption by 2040[1]. Urbanisation has also been central to the story, with UN ESCAP noting that Asia-Pacific is already home to more than 2.2 billion urban dwellers and that the region’s urban population is projected to increase by 50% by 2050[2]. Yet these themes no longer fully explain the investment opportunity now emerging across the region. Asia is increasingly shifting from economic expansion alone towards economic upgrading, with investment moving into infrastructure, energy systems, digital connectivity, industrial upgrading and more complex supply-chain networks. UNIDO data shows that Asia and Oceania accounted for 57.2% of global manufacturing value added in 2024 and 47.2% of global manufactured goods exports, underscoring the region’s centrality to global production networks[3]. This suggests the next phase of the opportunity is less about whether Asia grows, and more about how the systems supporting that growth are financed.

The Rise of Capital Formation

The distinction matters because growth driven by capital formation creates a different investment environment from growth driven by trade or consumption alone. The IMF has stated that Asia contributes over 60% of global growth and remains central to the world economy, while its October 2025 Regional Economic Outlook argued that Asia’s future productivity and rebalancing will depend partly on better financial intermediation and more efficient capital allocation[4],[5] . The scale of required investment is significant. The Asian Development Bank estimates that developing Asia will need to invest US$26 trillion in infrastructure from 2016 to 2030, or US$1.7 trillion per year, on a climate-adjusted basis. Within that figure, power accounts for US$14.7 trillion and transport for US$8.4 trillion, with telecommunications and water and sanitation making up the balance[6]. As shown in Figure 1, the data suggests that developing Asia combines substantially higher infrastructure investment requirements as a percentage of GDP with stronger expected real GDP growth than either the United States or Europe, highlighting a unique intersection of capital intensity and economic expansion. These figures underscore a region whose economic trajectory increasingly depends not only on output growth, but also on its ability to mobilise long-duration capital into the systems that enable that growth.

Building the Systems of Tomorrow

Viewed through this lens, Asia’s infrastructure requirements are not merely a development story, but a financing story. The region is investing simultaneously in power generation, transmission networks, renewable energy, transport infrastructure, telecommunications, water systems and increasingly digital infrastructure. ADB has warned that inadequate grid investment is holding back the energy transition in developing Asia and the Pacific, even as clean energy investment in developing Asia increased by more than 900% from 2013 to 2023, reaching US$729.4 billion in 2023 and accounting for around 45% of global clean energy investment[7]. Separately, the IEA has estimated that Southeast Asia’s energy investment averaged US$72 billion annually over the 2021 to 2023 period, but would need to rise to more than US$130 billion annually by the end of the decade under its Announced Pledges Scenario[8]. These investments increasingly require layered capital structures, longer tenors, regulatory coordination and project-specific underwriting. The challenge is therefore not only to build assets, but also to finance interconnected systems that must operate reliably over long-time horizons.

AI, Energy and Supply Chains

Artificial intelligence provides a clear example of this shift from “technology” to “infrastructure”. The IEA has stated that data centre electricity consumption is expected to roughly double by 2030, while power use from AI-focused data centres is expected to triple[9]. It also notes that data centre expansion is increasingly constrained by power availability, grid connections, transformers, gas turbines, chips and regulatory bottlenecks[10]. In Asia Pacific, JLL estimates that the region will need US$772 billion of capital investment to add 24 GW of data centre capacity between 2025 and 2030, including US$286 billion of real estate value creation and up to US$486 billion for GPUs and networking infrastructure[11]. Similar capital intensity is visible in supply-chain realignment. ASEAN FDI inflows rose 8% to US$226 billion in 2024 despite an 11% decline in global FDI flows, and manufacturing FDI grew by nearly 150% to US$44 billion, according to the ASEAN Investment Report 2025 prepared with UNCTAD[12]. New factories and industrial facilities attract attention, but they also create demand for power, logistics, working capital, transport networks and specialised financing solutions. Across AI and supply-chain reconfiguration, the common denominator is a growing requirement for flexible capital.

The Limits of Traditional Capital

These capital requirements are expanding at a time when traditional financing channels appear increasingly constrained or insufficient for the full range of borrower needs. Banks remain central to Asia-Pacific’s financial system: AIMA notes that bank lending has historically remained the dominant source of funding in Asia Pacific, making up close to 80% of the credit market, compared with just 56% in Europe and 33% in the US[13]. However, that bank dominance does not mean every borrower is adequately served. Baker McKenzie notes that higher funding costs and increased regulatory scrutiny on banks have created a financing gap that private credit providers are helping to fill through flexibility and speed of execution[14]. The IMF has also highlighted that Asia’s bank-based financial systems have sometimes allocated finance toward larger and less productive firms at the expense of smaller, younger and potentially more productive firms, supporting the argument that financial intermediation needs to broaden[15]. Public debt markets have grown, but access remains uneven: ADB reported that local currency bond markets in emerging East Asia reached US$27.2 trillion at the end of March 2025, yet this does not necessarily translate into efficient market access for most mid-market borrowers[16]. Taken together, these dynamics support the argument that Asia’s funding gap creates space for alternative lenders able to provide tailored financing solutions.

Why Private Credit Stands to Benefit

The APAC private credit market remains smaller and less mature than in the US or Europe, but it is growing from a low base. Preqin analysis estimates regional private credit assets under management stood at US$89bn in 2025 and are projected to reach US$142bn by 2030, implying a 13.57% annualised growth over that period[17]. The investment case also differs meaningfully from private credit in developed markets. In the US and Europe, private credit is generally driven by sponsor-backed direct lending and large-scale deployment into private equity-owned companies. Asia Pacific is structurally different: AIMA notes that the region spans more than 50 jurisdictions and that around 90% of APAC private credit transactions involve borrowers without private-equity backing[14], supporting the view that Asia offers a more fragmented, less intermediated and more borrower-specific opportunity set, where outcomes depend heavily on sourcing, local networks, underwriting discipline and structuring rather than simply deploying capital into standardised sponsor-backed loans.

Implications for ADM Capital

From ADM Capital’s perspective, this trend is consistent with an investment environment the firm has observed for almost three decades. Many of the most attractive opportunities across Asia have historically emerged where capital requirements were significant, but traditional financing options were limited. The region’s fragmented capital markets, diverse borrower base and ongoing infrastructure financing requirements continue to create situations where bespoke financing solutions are required. While the asset class continues to evolve, we believe the fundamental drivers underpinning demand for private credit remain closely linked to the region’s long-term development. The key question may therefore no longer be whether Asia will continue to grow, but how that growth will be financed.