HSBC Asset Management (AM) has set a target of USD 750m for its inaugural Asian energy transition infrastructure fund, according to two sources familiar.

The Red Hexagon Energy Transition Asia Fund is seeking an anchor limited partner (LP) and will offer co-investment opportunities, the sources said. The manager will kick off roadshows in October to this end, after launching the vehicle in May.

HSBC AM launched the energy transition infrastructure strategy with the former team behind Green Transition Partners, a Hong Kong-based manager acquired by HSBC last January. HSBC made its first investment from the newly formed strategy in Tekoma Energy, a Tokyo-headquartered solar developer, in August 2023.

The fund, seeded with Tekoma Energy, aims to close its second investment in the next couple of months, one of the sources said.

The strategy targets growth equity investments in mid-sized, greenfield renewable infrastructure developers in developed Asia. The manager prefers majority stake deals and invests during the early- to late-stages of project development. Equity cheques range from USD 50m-200m, the source said.

Solar, onshore wind, biomass, mini-hydro, energy storage, electricity grids, and EV charging and meter infrastructure are the technologies of choice. Markets in focus include Japan, South Korea, and Australia, while Southeast Asia accounts for about 20% of the portfolio, said the source.

The fund would like to exit its platforms after five to seven years and aims to generate 17%-20% gross internal rate of return, the source said.

HSBC AM declined to comment.

In August, HSBC AM announced a separate, new global transition infrastructure debt fund targeting mid-market borrowers across Europe, North America, and APAC. The global debt fund also targets USD 750m in size.