ADM Capital is launching a debt fund focused on renewable energy in Asia with a US$100m seed commitment from the Asian Infrastructure Investment Bank (AIIB).
Elkhorn Emerging Asia Renewable Energy Fund is the Hong Kong-based investment manager’s 10th direct lending vehicle and the first private debt fund to receive a commitment from AIIB.
ADM Capital is targeting a final close of US$500m in 2021 and is in discussion with a range of investors.
The fund will provide medium-term, senior and subordinated debt financing for renewable energy projects and developers.
“Our commitment at the outset will demonstrate to potential institutional investors the compelling opportunities in financing smaller companies working in the renewables sector in emerging Asian countries,” said AIIB director general of banking Dongik Lee.
“This group typically finds it difficult to attract capital from traditional sources like commercial banks due to their small size, complex risk profile and their need for a structured financing solution.”
Chris Botsford, co-founding partner and joint CIO of ADM Capital, said: “Renewable energy credit is the natural strategic expansion for ADM Capital. We are excited to be partnering with the AIIB, mobilising capital for the region’s entrepreneurs in their bid to deliver modern and essential renewable energy solutions to the region.”
He added: “There is intense pressure for companies and governments to meet the rapidly growing public demand for decarbonisation strategies across Asia-Pacific economies. We intend to leverage the skills of our senior investment team and their private market expertise, ADM Capital’s origination networks and the deep energy-sector experience of our specialist investment staff.”
Nicolas Le Clerc, who was appointed managing director for renewable energy in July, said: “Demand for electricity in Southeast Asia is expected to more than double by 2040, with solar, wind and hydroelectric power expected to account for the bulk of the increase in capacity.
“ADM Capital’s private lending expertise is uniquely suited to working with renewable energy entrepreneurs. By focusing on an underbanked segment of the market, the fund can generate returns exceeding those available from traditional infrastructure debt instruments such as bank loans or bonds.”