Temasek and HSBC team up to catalyse infrastructure projects
They will establish a debt financing platform whose initial focus will be on sustainable schemes in S-E Asia
Singapore
SUSTAINABLE infrastructure projects in South-east Asia are set to get a boost in the coming years, with a new partnership by Temasek and HSBC to establish a debt financing platform for such schemes.
In a joint announcement on Thursday, Temasek and HSBC said they will invest up to a combined US$150 million of equity to fund loans, working alongside strategic partners in the initial phase.
Over the longer term, the platform seeks to scale up to dispense over US$1 billion of loans within five years to support commercial development of the region's sustainable infrastructure sector.
Dilhan Pillay, chief executive officer of Temasek International, said: "As an investor committed to sustainability at our core, we are keen to explore innovative solutions to address critical infrastructure needs, especially in emerging markets in Asia, that will contribute to the transition to net zero."
Renewable energy and storage, water and waste treatment and sustainable transport, are areas where the platform will target to help meet carbon reduction targets and build resilience to offset the impact of climate change.
The new platform comes amid a need for more investments in infrastructure. A report by Bain & Co, Microsoft, and Temasek on Wednesday said some US$2 trillion in investment is needed over the next decade to build out South-east Asia's infrastructure for a sustainable transition.
The platform's initial focus will be on South-east Asia, and Temasek and HSBC observed that there is a "significant funding gap" in Asia for sustainable infrastructure required to address challenges and opportunities presented by climate change.
"Many infrastructure projects in the region face varying degrees of barriers to bankability. Private capital can play a unique role in bridging this gap," they said.
A Temasek spokesperson said they see their involvement in the partnership as having a "significant multiplier effect" on capital flows to the sustainable infrastructure space.
Temasek and HSBC note that the platform "aims to catalyse significant capital flows to the sustainable infrastructure space, deploying blended finance at scale over time to unlock more marginally bankable projects and create a tradable asset class, crowding in private and institutional investors".
A "meaningful portion" of the platform's loan portfolio will target marginally bankable sustainable infrastructure projects, and it will also provide project development expertise, technical assistance and blended finance solutions where needed.
The Asian Development Bank and Clifford Capital Holdings will support the platform as strategic partners, providing assistance including technical assistance and expertise in project development and project finance.
HSBC's group chief executive, Noel Quinn, said: "Neither private nor public sector can close the financing gap alone - but by working with Temasek, the Asian Development Bank and Clifford Capital, we can deploy significant amounts of blended finance for projects in South-east Asia that would otherwise go unfunded."
He added: "Collaborations matter in the fight against climate change, and this partnership provides an impactful model for others to follow."
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