The Asian Infrastructure Investment Bank is planning to invest up to $50 million in a fund focused on energy transition in South-East Asia launched by SUSI Partners, according to a project summary published on AIIB’s website.
“There’s a strong alignment between AIIB’s objectives and those of the Asia Energy Transition Fund,” Thomas Walenta, senior investment officer at AIIB, told Infrastructure Investor.
“The fund is investing in equity,” he explained. “It’s a vehicle focused on a single sector, with a region aligned to our goals, and launched by a European fund manager with a proven institutional track record trying to build up on their experience in developed markets to accelerate energy transition in Asia.”
Walenta added that the fund’s focus on the energy transition space – which includes renewable assets, energy efficiency, energy storage and microgrid projects – provided diversification among energy sub-sectors.
According to the summary, the AETF is expected to hold a first close during the first quarter of 2020 and is aiming to reach final close at $250 million by the third quarter of 2021.
The investment is expected to be approved during AIIB’s next board meeting, which will be held either in November or December. The project also includes a co-investment sleeve of up to $50 million that underscores the organisation’s commitment to the fund, Walenta said.
“We believe that the asset fund manager will be effective in finding deals, and we will be willing to increase our exposure on a deal-by-deal basis if those are particularly well-aligned with our mandate,” he added.
Walenta said that this is the first time the AIIB has considered adding a co-investment sleeve to a private equity fund commitment.
“If a fund comes up with a deal in the pipeline, we need to be more nimble to do co-investments and, therefore, we are trying to move to a model in which decisions related to execution of co-investment are taken by our investment committee, rather than by the AIIB’s board,” he explained.
The Asia Energy Transition Fund was initially announced in 2017 by SUSI Partners, a Switzerland-based infrastructure fund manager specialising in sustainable and clean energy investing, as a partnership with Swiss financier The South Pole Group with Edgare Kerkwijk as managing director of the vehicle.
However, in August 2018, SUSI Partners tapped Wymen Chan, a managing director at Singapore-based Armstrong Asset Management, to replace Kerkwijk, who left abruptly. The firm later announced it was dropping its partnership with The South Pole Group to build up its own team in Asia, which Chan heads.
“We have now hired our own team with the right people on the ground in Asia, and we will be able to execute this strategy on our own going forward,” Chan told Infrastructure Investor in an interview last December.
Returns for the new vehicle are expected to range from 11 to 14 percent on a hold maturity basis and the fund expects to invest in a portfolio of 20 to 25 assets, Chan said at the time.
Walenta said that SUSI had made the right decision in creating a team with a strong local track record. “The type of risks faced in emerging Asia are different from those in Europe, and therefore, they recognise they have to work with people who have been involved in the region and know the market.”
SUSI Partners declined to comment on its fundraising.