UK’s impact investor sets up £1.1 billion climate fund towards energy transition in Asia’s emerging markets

[SINGAPORE] The UK’s development finance institution has launched a £1.1 billion (S$1.89 billion) climate fund aimed at supporting the energy transition in Asia’s emerging markets.

British International Investment (BII) announced on Wednesday (Apr 22) that this new platform, known as British Climate Partners, will work with private investors to deploy capital through a combination of equity platforms and mezzanine finance to scale climate projects, reduce early-risks and potentially offer higher returns to attract commercial investors.

The initiative will focus on investments that will support emissions reduction in fast-growing countries with coal-based energy networks and rising demand for clean energy including India, the Philippines, Indonesia, Vietnam, Thailand, Malaysia and other South-East Asian economies, the release said.

In the next five years, BII expects that at least 40 per cent of new investments, including those made by the new fund, will qualify as climate finance – up from the target of 30 per cent in the previous five years.

Srini Nagarajan, managing director and head of Asia at BII, said that Asia’s energy transition will depend on mobilising private capital at scale.

“Through this new vehicle, we’ll use our experience, capital and partnerships to build platforms, de-risk projects and crowd in long-term investment into commercially viable climate opportunities across the region,” he added.

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BII will also be sustaining the UK’s longstanding commitment to frontier markets in Asia, including Nepal.

It will commit at least 25 per cent of new investments to the least developed countries, where private capital remains scarce and development needs are greatest, over the next five years.

BII will also seek to make “market-level impact” investments that go beyond a commitment to a single company to develop a wider sector or market.