The Asian Development Bank will increase support for clean energy development with an injection of up to $40 million in two new private equity funds that will target investments in promising green companies and projects across the region.
ADB's Board of Directors approved equity investments of up to $20 million each in the Clean Resources Asia Growth Fund and the Renewable Energy Asia Fund. The former will target private equity investments in clean energy technology companies focused on Asia, while the latter will invest primarily in renewable energy projects in India and the Philippines.
"The ultimate impact of these funds will be increased contributions from investee companies to sustainable economic growth and greenhouse gas emission reductions in ADB's developing member countries," said Robert van Zwieten, Director in ADB's Private Sector Operations Department (PSOD).
Asia's booming economies and surging demand for clean power to strengthen energy security and reduce pollution, as well as ongoing sector reforms in many countries, are making the region one of the most attractive destinations in the world for environmentally-friendly investments. The People's Republic of China (PRC), India and the Philippines, are among the economies that have the most promise.
ADB, which is committed to low carbon growth and renewable energy development in member countries, has been an active participant in clean energy funds since the early 2000s, helping to position them as a new asset class in Asia. The latest equity investments follow the screening of over a dozen clean energy sector focused funds that approached ADB in the past two years.
"ADB's participation in these funds will help them achieve their target fund size, and provide confidence to private investors to come on board. It will also aid capital markets development by filling a financing gap, and encourage support for other private equity funds interested in the sector," said Mr. M. Shin Kim, Head of Private Equity in PSOD.
The Clean Resources Asia Growth Fund - sponsored by CLSA Capital Partners, a brokerage and investment group active in Asia since 1986 - will target businesses engaged in clean energy-related operations in Asia, with the main focus in the PRC and India. It will make about 12 to 14 investments, taking significant minority positions in investee companies. The target fund size is $200 million.
The Renewable Energy Asia Fund - to be managed by English fund manager Berkeley Energy - will seek out renewable energy projects, with a focus on India, the Philippines and other Southeast Asian countries. It will aim to take controlling stakes in projects and project developers with investments ranging from €5 million to €25 million. The target fund size is €150 million.