Actis says it’s ‘right time’ to invest in SE Asia energy transition

Sustainable infrastructure investment firm Actis has acquired a majority stake in Southeast Asia-focused renewables platform Levanta Renewables for an undisclosed sum, marking its second investment in the region from Actis Energy 5 Fund in as many months.

Rahul Agrawal, Actis’s director of energy infrastructure, told Infrastructure Investor the deal would see the firm invest up to $500 million on top of the “relatively modest entry price” for the Vietnam-based business, which the firm intends to scale into a 1.5GW renewable energy platform.

With onshore wind projects totalling 300MW in advanced development across the country, Vietnam will continue to be an anchor market for the business as it seeks new opportunities in other Southeast Asian markets including the Philippines, Indonesia, Thailand and Malaysia. The business will also focus on ground-mounted and rooftop solar projects, alongside onshore wind.

According to Agrawal, Southeast Asia has in recent years become an attractive landscape for private capital and is well-aligned with Actis’s buy-and-build strategy, which the firm has previously deployed across Latin America, Africa and other Asian markets, building more than 15 power generation platforms in those regions to date.

“[Southeast Asia] still depends on fossil fuels quite a lot [and], generally, renewable penetration has been low. We have been looking at renewable projects in the Southeast Asia market for the last five to six years and, to be honest, we have been quite disappointed with the pace of development but I think a few things have changed,” he said.

“Firstly, the cost of renewable power has become competitive with thermal power in the Southeast Asian region. Secondly, regulatory policies are now aligning for more private sector participation in the power sector and in renewables in general. We saw this as the right time to start a renewable energy platform, which can ride on the coattails of this change that has happened, and build a [large-scale] buy-and-build platform.

“We think that we can bring to bear our experience of building these buy-and-build majority-owned platforms in Southeast Asia and build a high-quality renewables platform in the next five years.”

The transaction closely follows the June launch of Bridgin Power, a power generation business fully owned by Actis, that is pursuing gas-fired power projects. Also funded through the Energy 5 Fund, the platform is targeting a total portfolio capacity of 1.2GW across Southeast Asia by 2028.

To that end, the Singapore-headquartered business recently closed its first deal, acquiring a 49 percent stake in a 220MW combined cycle gas turbine power plant in Bangladesh, and plans to seek out further gas-fired power opportunities in Vietnam, Indonesia, Thailand, the Philippines and Malaysia.

According to Bridgin Power chief executive Dennis Foo, the platform – which has up to $500 million in deployable capital from the Energy 5 Fund – is an opportunity to support the region’s transition from coal power to renewable energy. “Gas is the transition fuel [that will ensure] an equitable energy transition in Asia,” Foo told Infrastructure Investor.

Launched in March 2020, Actis Energy 5 Fund reached a final close of $4.7 billion in October 2021. Including co-investments, the fund represents $6 billion in investable capital.