IFC backs SE Asia clean energy fund

The development bank has committed $20m to Armstrong Asset Management shortly after the firm closed its first deal from the new fund.

The International Finance Corporation has committed $20 million to Armstrong Asset Management's Southeast Asia-focused clean energy fund, according to an Armstrong statement. Existing commitments come from global investors including European development institutions GEEREF and DEG, and an undisclosed Asia-based corporation.

Armstrong is the first private equity fund that IFC has backed which is dedicated to clean energy and focused purely on this region, the statement said. 

Over the last 12 months, the proposition for renewables in Southeast Asia has become even more compelling. Supply side costs have continued to decrease.

Andrew Affleck, managing partner, Armstrong Asset Management

Melissa Kang, head of East Asia Pacific private equity and investment funds at IFC, added, “The Armstrong Fund is meeting an ever growing need for climate change private equity in Southeast Asia, and we believe their investment strategy is well suited to these developing markets.”

Armstrong made a first close on $65 million in August last year and is now paving its way to a $150 million final close, expected in August 2013, Private Equity International reported earlier.

“Currently, we have further soft commitments of $63 million, which is a good indication of the continued level of interest to date, but this interest is subject to further due diligence and legal documentation, so cannot be announced yet. However, we will cap the fund size based on what we feel is a realistic quantum to deploy over the next four years,” Andrew Affleck, managing partner, said in the statement.

Additional commitments to the fund are expected from European family offices, European institutional funds and a number of other development finance institutions.

The firm has been actively pursuing deals in the region, revealing its first transaction mid-May into six solar plants in Thailand alongside Hong Kong-based Symbior Energy. Armstrong also has a deal in the Philippines undergoing due diligence, Andrew Affleck, managing partner, told PEI in an earlier interview.

Armstrong tapped into SE Asia's clean energy opportunities
by investing in six solar plants in rural Thailand

In April, the firm hired Yasushi Ujioka as an investment director to bolster its capabilities in the sector. Ujioka was an investment director at Swiss-Asia Financial Services, the asset management firm of the China District Energy Fund. 

“Over the last 12 months, the proposition for renewables in Southeast Asia has become even more compelling. Supply side costs have continued to decrease, meaning that in a number of project cases around the region, subsidies are not required in order to make the economics work,” Affleck added in the statement.

“The increasing cost of diesel fuelled power, translating into peak costs of over 50 US cents per kilowatt-hour, means that switching to solar and mini-hydro solutions is immediately more cost effective for long term sustainable supply.”

IFC has also been active in Asia recently. The $31 billion development finance institution typically invests in first time funds or sectors as well as geographies that need capital. Recent commitments include $25 million to private equity fund Lighthouse in India and a $20 million investment into a $250 million newly-established renewable and clean energy fund in India, which will be managed by Nereus Capital Management.