For British International Investment (BII) and SUSI Partners, tying up to address the climate financing gaps in Southeast Asia is a bit of a no-brainer.

After all, the UK development finance institution (DFI) and impact investor has previously said it will invest up to GBP 500m (USD 622m) in climate finance in the region by 2026, while specialist Swiss investment manager SUSI did a final close of its SUSI Asia Energy Transition Fund (SAETF) in September 2024 at USD 259m.

Their efforts to move the needle on Southeast Asia’s energy transition journey culminated with an announcement on 22 January that BII, Dutch DFI FMO, and SUSI have set up a new utility-scale renewable energy platform called Sustainable Asia Renewable Assets (SARA). The platform was established within SAETF, with the aim to build a 500-megawatt portfolio of greenfield renewable energy projects across Southeast Asia.

BII and FMO invested USD 70m and USD 50m, respectively, through co-investment commitments to SARA and top-ups to the transition fund.

“We see Southeast Asia as generally overlooked by private capital because of its inherent challenges – it comprises different markets, distinct cultures, unique regulations in each country – making it extremely difficult to scale a business locally and regionally,” said Wymen Chan, Asia head of SUSI Partners.

“At the same time, this means there is an opportunity to fill a market need for a renewable energy company that is specialised and focused on these markets – and if we do it right, SARA can become attractive to investors and catalyse private capital.”

According to Srini Nagarajan, managing director and head of Asia at BII, the goal of building a platform like SARA from scratch is to “take early-stage risks commercial investors hesitate to take, build a pipeline of bankable projects, and eventually mobilise commercial capital to these markets”.

Investment focus

SUSI has been active in the Southeast Asian energy transition market since 2019 when it set up a presence in Singapore.

It closed SAETF initially in 2023 at USD 120m, before reopening it last year due to strong deal flow and demand from LPs. It has so far made investments in Vietnam, the Philippines, Thailand and Cambodia.

The fund’s portfolio is split into two distinct themes, explained Chan: distributed generation assets such as energy efficiency systems and commercial and industrial rooftop solar, and grid-connected utility-scale renewable assets.

About 40% of SAETF has been deployed into the distributed generation strategy, added Chan. SUSI’s focus for 2025 will be to deploy the remainder of the fund on utility scale projects, particularly through investments in the SARA platform. Through SARA, SUSI will work with BII and FMO to build a portfolio of high-quality greenfield assets and pipeline.

“The first fund is only a drop in the ocean for the energy transition needs of emerging Asia,” said Chan. “SUSI is certainly thinking of new fund strategies to address the growing needs of emerging Asia and will be back in the market soon.”

SUSI’s Asian activity to date includes joint ventures with Malaysia’s Invest Energy, Singapore-based Entoria Energy, and Pacific Impact Development; a convertible loan to Asia Clean Capital Vietnam; a framework agreement with BayWa r.e for solar photovoltaic projects; and an investment agreement with Alba Renewables to support solar PV projects in the Philippines and other parts of Southeast Asia.

Once in a lifetime 

As a DFI, BII’s role is to attract commercial capital to the projects and businesses it supports. Nagarajan said from a climate finance perspective, BII has invested about USD 200m into Southeast Asia since 2023.

“Southeast Asia is a fast-growing region with a heavy reliance on fossil fuel,” he added. “However, climate sectors are still at a nascent stage. The regulatory environment is evolving, and there is a lack of bankable projects and demonstrable feasibility. This is where DFIs like ours can play a pivotal role. Where others may see only risks, we actively look for opportunities to create impact.”

In January 2024, for example, BII made a USD 13.5m commitment to Southeast Asia Clean Energy Fund II, an early-stage blended finance vehicle managed by Singapore-based Clime Capital. It is also working alongside Pentagreen Capital to put together a blended finance programme that aims to mobilise up to USD 5bn for energy transition in the region.

Emerging Asia offers a “once in a lifetime” opportunity to actively participate in its energy transition journey, but the challenge for investors is to do it profitably and in a just and sustainable way, said Chan.

SUSI manages all project stages with developer partners and contractors, from development through operations, added Chan. Platforms like SARA can be helpful as they can direct public and private capital to real assets that fit the criteria for a just and sustainable energy transition.

“And if there is a dearth of such opportunities, we can – with support from our investors like BII and FMO – build our own greenfield assets that fulfil these developmental and climate mitigation criteria. That is what SARA is setting out to do,” said Chan.