With an initial equity investment of $150 million, the partnership aims to grow the Singapore-based platform with a view to financing over $1 billion in loans within five years. The platform will target marginally-bankable projects in the renewable energy and storage, water and waste treatment, and sustainable transport sectors in particular.
The Asian Development Bank and Clifford Capital Holdings have also signed on to support the platform as strategic partners.
Infrastructure Investor understands that the platform is looking to provide loans of between $20 million and $40 million and may consider being part of a consortium of lenders for certain projects.
While the new venture is expected to focus on projects in Southeast Asia initially, a source familiar with the matter said that, as the platform scales, it is likely to expand its geographic scope to the broader Asian region and is open to lending to sectors such as climate adaptation, agriculture and land use, and technology-led solutions.
According to the source, the initial investment from HSBC and Temasek is a seed amount which aims to catalyse other commercial lenders and “crowd in” private capital to participate in projects. The platform intends to have “a significant multiplier effect” on capital flows to the sustainable infrastructure space in Asia, deploying blended finance at scale to de-risk target sectors.
The partnership is also willing to refine its business model and governance structure in time and may agree to bring in other shareholders or strategic partners who add value to the venture, the source added.
In a statement, HSBC group chief executive Noel Quinn said: “This innovative partnership aims to tackle some of the biggest barriers to financing sustainable infrastructure where it’s needed the most. 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 Southeast Asia that would otherwise go unfunded. Collaborations matter in the fight against climate change, and this partnership provides an impactful model for others to follow.”