The SUSI Asia Energy Transition Fund (SAETF), which has received commitments in excess of $100m, has made four investments so far and is set to reach final close shortly.
British International Investment (BII), the UK development finance institution (DFI), has made its first investment in south-east Asia in its current five-year strategy via a $15m commitment to the SUSI Asia Energy Transition Fund (SAETF), a private equity fund targeting energy transition infrastructure, managed by Swiss-based SUSI Partners.
BII’s commitment adds to those already made in SAETF by development finance institutions Asian Infrastructure Investment Bank ($22m), FMO ($20m) , Swedfund ($15m), Norfund ($15m), and Austria’s OeEB ($8.5m), along with private investors.
The fund, which was launched in 2019 and is due to reach a final close within the next few weeks, currently has a size of $111m, a SUSI Partners spokesperson told Impact Investor.
SAETF targets infrastructure investments in areas such as renewable energy, energy efficiency, and energy storage projects. It is focused on emerging economies in the region, including Indonesia, Vietnam and the Philippines.
BII has said it plans to invest up to £500m of climate finance in the Indo-Pacific region in its 2022-2026 strategy, and recently opened a new office in Singapore to oversee its regional investments. It is also aiming to direct 30% of its total new commitments towards climate finance.
BII’s traditional focus has been on Africa and south Asia, but it is now seeking to expand its investments in the Indo-Pacific region – specifically the Philippines, Indonesia and the Mekong region, including Vietnam, Cambodia and Laos – due to the challenges of meeting climate change goals in the face of rising energy demand.
Most of the region’s economies have more than doubled in size since 2000, resulting in an increase in energy demand averaging around 3% a year over the past 20 years, according to the International Energy Agency.
“Southeast Asia is a region that is critical to our global climate objectives. It is home to major emitters that need investment to deliver on their international climate commitments, and many countries that are very vulnerable to the effects of climate change,” Kara Owen, the UK’s High Commissioner to Singapore said.
Srini Nagarajan, managing director and head of Asia at BII, described the fund as “an excellent re-entry point for BII into Southeast Asia and a clear statement of our ambition to provide climate finance and support innovation to meet the challenges from the climate crisis”. He said BII would collaborate with SUSI’s local teams to develop further “scalable and bankable” sustainable projects.
The fund’s goal is to invest in energy infrastructure that enables sustainable economic growth, while also showing that that Southeast Asia is not just an impactful but a highly attractive market for both public and private investors, according to Wymen Chan, head of Asia at SUSI Partners.
The fund manager has made four investments on behalf of SAETF so far. A joint venture with Singapore-based Entoria Energy which is developing rooftop solar photovoltaic energy; a venture with Malaysia’s InvestEnergy which backs and operates energy efficiency projects across Southeast Asia; a venture with Singapore-based Pacific Impact which is developing utility-scale renewable energy projects in Indonesia, Vietnam, the Philippines, Cambodia and elsewhere in the region; and an investment in Asia Clean Capital Vietnam, a solar developer for commercial and industrial customers in Vietnam.
The SUSI spokesperson said the fund is currently focusing on accelerating deployment through established platforms, while seeking to add more investments through the rest of the year.
BII told Impact Investor it was currently exploring further investment opportunities in the region aligned with its climate strategy, with a particular focus on renewables, waste management, water infrastructure and the electric vehicle ecosystem.
“We are keen to work with local businesses, like-minded investors and other specialist investment managers to bring forward innovative approaches to tackle climate change issues,” a BII spokesperson said.