Pentagreen Capital, the sustainable infrastructure debt financing company established by HSBC and Temasek, is seeking to deploy $1 billion for Asia’s sustainable infrastructure.

Pentagreen has on Tuesday announced progress on the Green Investments partnership, an innovative blended finance program set up to address climate finance gaps and increase the bankability of green and sustainable infrastructure in Asia.

This follows the announcement at the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change by Monetary Authority of Singapore (MAS), Temasek, Allied Climate Partners (ACP) and International Finance Corporation (IFC) on the intent to collaborate towards developing bankable, climate-related projects and businesses in Asia.

The partnership is seeking to deploy $1 billion under Financing Asia’s Transition Partnership (FAST-P), a blended finance initiative that aims to mobilize up to $5 billion to finance the energy transition and marginally bankable green projects in Southeast Asia.

It is noted that developing Asia needs $1.7 trillion annually in infrastructure investments until 2030 to maintain its growth momentum while responding to climate change.

Many sustainable infrastructure projects in the region face difficulties in attracting commercial financing, and these gaps are more acute in the project development and construction phases.

Thus, blended finance can help unlock the flow of capital to such projects.

The partnership also seeks to bridge critical gaps in Southeast Asia’s sustainable infrastructure financing needs through the deployment of blended finance, crowding in commercial and catalytic capital from public, private and philanthropic partners.

The partnership will deploy capital to projects in sectors including renewable energy and storage, electric vehicle infrastructure, sustainable transport, and water and waste management, as well as those from other green infrastructure sectors.

Over time, the partnership will also increase the supply of bankable opportunities in the market.

HSBC and Temasek, as the founding shareholders of Pentagreen, will continue to commit capital.

The Singapore government will also contribute concessional capital to the Green Investments partnership to match contributions from the other potential catalytic capital providers such as ACP.

IFC is considering opportunities in providing appropriate financing that can in turn crowd in other capital providers.

Capital deployment is expected to commence in 2025.

“There is a clear and urgent need for more blended finance to scale up the available funding for sustainable infrastructure in Asia,

“No single financier can close Asia’s infrastructure funding gap, but this diverse, international group of partners supporting the Green Investments partnership represents a step forward in our united ambition and effort to bridge the climate finance gaps in developing Asia,” said Marat Zapparov, Chief Executive Officer of Pentagreen.

Connie Chan, Head of Financial Services at Temasek, said developing Asia faces an acute gap in financing the green infrastructure the region requires for robust, sustainable growth in line with its decarbonization goals.

“Addressing the bankability challenges such projects face is key, and through programs like Green Investment partnership, we aim to crowd in more like-minded partners with the appropriate forms of capital to bridge the risk-reward disconnect inherent in these projects,

“Ultimately, we aim to contribute to change at the systems level, and unlock the necessary financial flows to accelerate the transition in Asia,” she added.

Greg Guyett, Chief Executive Officer of Global Banking and Markets at HSBC, said the Green Investments partnership managed by Pentagreen will enable them to support more sustainable projects and provide another model to accelerate the transition to a low carbon economy.

“It is crucial that financing across the capital structure is accessible to a wider group of transition innovators, and we are convinced that blended finance is one way to do this,

“I believe that the strong commitment of our partners, regionally focused while globally connected, will significantly contribute to the success of the Green Investments partnership,” he added.

Leong Sing Chiong, Deputy Managing Director (Markets and Development) of the MAS, said they are encouraged by the progress made by Pentagreen and its partners on the Green Investments partnership, which uses blended finance to develop marginally bankable green projects to bankability.

“This is a significant step towards unlocking a broader public-private effort to mobilize finance for Asia’s transition,” he added.

Ahmed Saeed, Chief Executive Officer of ACP, said there is no path to net zero without a significant increase in the flow of climate finance to emerging economies.

“And that will not happen without well designed, innovative, and bold partnerships that leverage the best of the private, public, and philanthropic sectors,” he added.

Riccardo Puliti, Regional Vice President for Asia Pacific at the IFC, said climate change threatens environmental stability, economic growth, and human development in Asia.

“Improving access to finance for climate-smart, sustainable infrastructure projects in the region is critical not just to addressing this challenge, but also to creating markets, spurring growth, and creating jobs in the region’s emerging and developing economies,

“This important initiative would help increase access to climate finance and the bankability of crucial green and sustainable infrastructure projects,” he added.

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