The Indonesia Investment Authority (INA), a sovereign wealth fund, has signed an investment framework agreement (IFA) with the Danish government’s Investment Fund for Developing Countries (IFU).

Under the agreement, the parties will explore investment opportunities that will advance green energy transition and inclusive social development in Indonesia, including prospective co-investments in renewable energy, water, waste management and other circular opportunities.

The target value of the joint investments is expected to reach up to US$500 million. The INA and IFU say they have the ambition to provide capital to green and sustainable projects in the range of US$100 million, respectively. And together, the two investors will use their leverage to source potential co-investors contributing towards the remaining target.

The agreement is the first between the sovereign fund and the IFU, which is recognized for its high economic, social and governance (ESG) standards, and it is in line, the INA says, with its commitment to attract and partner with global investors to enable a sustainable development in Indonesia.

“Signing this agreement is another step in our effort to support the green transition,” says Torben Huss, CEO of IFU. “A partnership with INA provides a good platform for assisting private companies to engage in greening the Indonesian economy and enabling private investors to increase investments with a double bottom line – being profitable as well as reducing greenhouse gas emissions.”

INA’s CEO Ridha Wirakusumah adds: “The deal marks another positive step to support Indonesia’s commitment in meeting its 2060 carbon neutrality pledge, and we remain optimistic that not only will the agreement bring optimal risk-adjusted returns for the parties involved, but it will support and stimulate an inclusive growth for Indonesia in the long run.”