BII commits $15m to SUSI Asia Energy Transition Fund

British International Investment, the UK development finance institution, has made its first investment in Southeast Asia since launching a new investment strategy focused on climate finance in the region.

BII announced a $15 million commitment to the SUSI Asia Energy Transition Fund, a vehicle focused on energy transition infrastructure, including renewable energy assets, energy efficiency and energy storage across emerging markets in Southeast Asia such as Indonesia, Vietnam and the Philippines.

SAETF is managed by the Switzerland-headquartered SUSI Partners and was launched in September 2019. It held a first close on $81 million in May 2021 and is aiming to reach a final close this year, with a target of $200 million. As well as BII, the fund has secured commitments from the Asian Infrastructure Investment Bank, FMO, Norfund, OeEB and Swedfund.

BII’s commitment is the first of a planned series of investments of up to £500 million ($622 million; €575 million) in total in climate finance in Southeast Asia, covering both equity and debt.

Srini Nagarajan, managing director and head of Asia at BII, based in Singapore, told Infrastructure Investor the DFI was attracted to SUSI because of its “proven track record… as a specialist investment manager” in the energy transition space.

“The fund will also contribute towards global mitigation goals and [meeting the aims of] the Paris Agreement, through financing clean energy solutions, and increasing the supply, reliability and affordability of clean energy… particularly in underserved areas like the islands of the Philippines and Indonesia,” he said.

“We found in SUSI a partner that is strongly aligned with our climate strategy, with a fairly mature team.”

Nagarajan also cited SUSI’s primary strategy of financing greenfield assets through both the creation of platforms that will construct, own and operate renewable energy assets, and joint ventures with other development partners.

“Most importantly for us, it can generate co-investment [opportunities] for us. So we will be in a position to work with SUSI to help them build these bankable projects in Southeast Asia,” he said, confirming that BII intends to pursue both direct and indirect investments as it meets its target of deploying £500 million of capital by 2026.

‘More investable opportunities’

On what BII is looking for from other GP partners, Nagarajan said there were several factors it considers.

“Firstly, this entire £500 million [will go] towards energy and climate-related investments. We’re not doing any non-climate-related investments in south-east Asia like we do in other markets like South Asia and Africa,” he said.

“Secondly, [we want GPs] to think about how to bring more investable opportunities to the region, because there is a lot of capital available provided you create bankable opportunities.

“Thirdly, we are looking for some amount of complementarity between our skillset – a deep knowledge of the energy sector including in other emerging markets – and what the GP brings to the table.

“Fourthly, we want to be an active LP, actively co-investing alongside the GP. And we want to focus on our core markets of Vietnam, Indonesia and the Philippines, rather than drifting away.

“Finally, along with BII’s money comes the ecosystem, by which I mean better international practices on business integrity and [other parts of] a value creation plan that we can bring to the table, and GPs can benefit from this. We are owned by the UK government’s Foreign, Commonwealth & Development Office, which is part of the wider ecosystem of British Investment Partnerships that includes BII as well as UK Export Finance, and [works with] the Department for Business and Trade.”

Commenting on BII’s investment in SUSI’s fund, the British High Commissioner to Singapore, Kara Owen, said in a statement: “Southeast Asia is a region that is critical to our global climate objectives. It is home to major emitters that need investment to deliver on their international climate commitments, and many countries that are very vulnerable to the effects of climate change.”

Wymen Chan, head of Asia at SUSI Partners, said in a statement: “Energy demand in south-east Asia is growing fast in line with the region’s economic development. Our goal is to direct capital towards the buildout of infrastructure that allows this growth to occur in a sustainable manner while proving that Southeast Asia is not just an impactful but a highly attractive market for public and private investors alike.”