ADM Capital launches Emerging Asia Renewable Energy Debt Fund
ADM Capital, a Hong Kong headquartered investment manager with specialist experience in Asia Pacific credit and sustainable investment, has received a USD100 million seed commitment from the Asian Infrastructure Investment Bank (AIIB) to launch a new USD-denominated Asia-focused debt fund dedicated to renewable energy called the “ADM Capital Elkhorn Emerging Asia Renewable Energy Fund”.
The commitment is AIIB’s first to a private debt fund.
The Fund, which will be ADM Capital’s tenth direct lending private credit fund, aims to address unfulfilled funding needs in the renewable energy sector in Asia by providing medium term, senior and subordinated debt financing solutions to renewable energy projects and developers. ADM Capital has over 20 years of experience providing flexible credit solutions to Asian entrepreneurs unable to access traditional financing channels across Asia Pacific.
“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,” says AIIB Director General (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.”
“ADM Capital was a pioneer in Asia’s private credit market and is the leader when integrating sustainability into the underwriting process. Renewable energy credit is the natural strategic expansion for ADM Capital,” says Chris Botsford, Co-founding Partner and Joint Chief Investment Officer. “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.”
ADM Capital’s experience across the credit spectrum, its attention to ESG and years of engagement with the region’s entrepreneurs, corporates, governments, non-governmental organisations and financial institutions, positions the firm to support the region’s transition to renewable energy.
“There is intense pressure for companies and governments to meet the rapidly growing public demand for decarbonisation strategies across Asia Pacific economies,” adds Botsford. “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.”
The firm is targeting a final close of USD500m in 2021 and is in discussion with a range of investors seeking to scale up investment in Asia’s renewable energy sector. The fund offers investors a timely opportunity to deploy capital into Asia’s fast-growing energy infrastructure while fulfilling positive impact investment objectives owing to the fund’s specific renewable energy purpose.
In July 2020, the firm recruited Nicolas Le Clerc as Managing Director, Renewable Energy. Le Clerc, who was an energy banker in Asia for over 18 years, brings ADM Capital considerable renewable energy financing experience and deep sector relationships.
“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,” says Le Clerc. “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.”
The appointment follows the addition of Neil Harvey, Executive Chairman, who joined ADM Capital in November 2019 to support the firm’s Asia Pacific private credit expansion. “We will continue to communicate the long-term operational and strategic benefits of improved governance and sustainability to our borrowers. The Fund will ensure we continue to focus the potential of the region towards a more sustainable, inclusive future for Asia’s people and its’ biodiversity,” says Harvey.