The ADB will provide up to 10 million US dollars for an equity stake in the ShoreCap II Fund.
This will invest in microfinance institutions and small business banks in both Asia and Africa, with ADB's contribution solely for use in its developing member countries.
The fund will be managed by Equator Capital Partners, an independent fund management company registered in the US.
It will take equity stakes in regulated, small lenders with high growth potential who can reach neglected groups such as women entrepreneurs and rural microenterprises, the ADB said.
Key target markets will include Bangladesh, the People's Republic of China, India, Indonesia, Pakistan, the Philippines, Sri Lanka, Thailand and Viet Nam.
"The goal is to take minority stakes in companies with investments of 2-10 million US dollars each, and to exit holdings over an average of five years, with Asian investments making up about half the fund's total portfolio.
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ADB's participation will allow the fund to