AIIB commits US$50 million to Asia energy transition fund
SUSI fund seeks to mobilize private capital for sustainable energy in emerging markets in the region
28 May 2021 | The Asset

The Asian Infrastructure Investment Bank (AIIB) has commited US$50 million to the SUSI Asia Energy Transition Fund, contributing to its first closing. The fund targets sustainable energy infrastructure investments across the energy transition spectrum, from renewable energy generation to energy-efficient measures, as well as those that enable clean energy solutions, such as energy storage and microgrids.

AIIB’s commitment to the fund will help SUSI Partners, a Swiss infrastructure fund manager focusing on sustainable energy infrastructure investments, to continue to bridge the funding gap in sustainable energy infrastructure and attract more private capital to emerging market economies in Asia.

The fund has also raised commitments from several other development finance institutions as well as private institutional investors, with a total contribution of US$81 million.

In 2019 AIIB’s board of directors approved a commitment of up to US$50 million to the fund and a co-investment sleeve of up to US$50 million for co-investing with the fund, making it the bank’s first private equity fund contributions dedicated to the energy sector.

While carbon dioxide emissions in many developed countries have been stagnating or even decreasing, Southeast Asia has been recording increased emission levels. This trend is expected to continue for the foreseeable future as the region is characterized by strong GDP growth and favourable population dynamics that are driving up energy demand. Accordingly, directing capital towards a sustainable energy system in the region has become more urgent.

“Our participation in this fund demonstrates our firm dedication to investing in sustainable energy projects that will increase access to clean, safe and reliable electricity for millions of people in Asia,” says AIIB director general for banking Dongik Lee. “By providing capital in emerging markets where it is scarce, private equity has a critical role to play in development. As an investor in funds like this one, we can build diversification across our portfolio and participate in creating an enabling environment to crowd-in more private capital for sustainable energy projects.”

The focus of the fund is well-aligned with the guiding principles stipulated by AIIB’s Energy Sector Strategy, including promoting energy access and security, realizing energy efficiency potential, reducing carbon intensity of energy supply, and catalyzing private capital. It will also contribute to AIIB’s climate target of 50% of approved financing to be directed to climate finance by 2025.