Malaysia’s largest sector pension fund KWAP is providing an initial investment of around €100m to the fund, which is seeking to raise capital from other institutional investors.
Malaysia’s largest public sector pension fund, KWAP, has appointed Climate Fund Managers (CFM) and locally based Argos Partners to co-manage a shariah-compliant, private equity infrastructure fund in which KWAP has made an RM500m (€102m) anchor investment.
The Malaysia Climate Infrastructure Fund (MCIF), which has a target final size of $500m (€429m), is mandated to invest in infrastructure investments across Malaysia, the rest of Asia and Latin America. It is expected that at least 40% of its capital will be allocated to Malaysian opportunities.
As such, it forms part of Malaysia’s broader Dana Pemacu initiative, launched by KWAP in May 2024, which aims to generate RM6bn of investment to strengthen the country’s private market ecosystem through both conventional and shariah-compliant funds.
MCIF is mandated to invest in sectors including renewable energy, transportation, digital infrastructure, water and wastewater. It will typically make equity investments in the $15m-$30m range, depending on the size, sector and stage of each project.
Jeb Victorino, investment director at CFM, told Impact Investor the fund was currently targeting investments in digital infrastructure and water that were aligned with the fund’s development mandate and its aim of delivering measurable environmental and social impact alongside financial returns.
The managers intend to raise capital from a diverse base of institutional investors, including pension funds, insurance companies, asset managers and family offices.
“The fund’s structure, combined with its strong development and sustainability credentials, is designed to appeal to both conventional and values-based investors,” Victorino said.
As a Shariah-compliant fund, MCIF must invest according to the requirements of Islamic finance. To that end, MCIF has appointed a dedicated Shariah advisor to ensure that all investments comply with Shariah principles.
Victorino said the fund’s Shariah-compliant nature would guide the way investments were structured but did not restrict its sectoral focus and may help broaden its appeal.
“We believe the fund’s Shariah-compliant status enhances its appeal by opening access to a broader pool of investors, particularly those with mandates or preferences for Islamic finance. This expands fundraising avenues while maintaining alignment with globally accepted investment practices,” he said.
Dana Pemacu ambitions
In June, CFM – which is co-owned by Dutch development finance institution FMO – was selected by KWAP as one of 12 shortlisted general partners (GPs) to manage funds alongside local co-GPs as part of the Dana Pemacu initiative. CFM and Argos Partners will manage the fund as a joint venture domiciled in Malaysia.
CFM said that by bringing global general partners and local investment managers together in a co-GP model, the Dana Pemacu programme would help enhance domestic capacity, accelerate investment into critical sectors and drive sustainable economic, environmental and social growth.
The Dana Pemacu initiative is focused on three main asset classes – private equity, infrastructure, and real estate. Funds will target sectors including food security, education, the silver economy and healthcare, energy transition, digital economy and financial inclusion.
