The Monetary Authority of Singapore (MAS), Clifford Capital, and the Private Infrastructure Development Group (PIDG) announced Wednesday that the Energy Transition Acceleration Finance partnership (ETAF) has achieved its first close with $250 million in committed capital for its displacement strategy.
The trio said in a statement that the ETAF is a blended finance fund under Singapore’s Financing Asia’s Transition Partnership (FAST-P) initiative.
To address different transition pathways in Asia, ETAF adopts a displacement strategy which supports investments in grid modernization and other energy transition infrastructure projects to accelerate the displacement of fossil fuel-based power generation; and a replacement strategy focusing on replacing coal-fired power generation with lower-emissions power sources.
Through blended finance and risk-sharing mechanisms, ETAF seeks to mobilize capital into earlier-stage or higher-risk energy transition infrastructure investments where financing is not otherwise available at a sufficient scale, tenor, or risk appetite.
As these investments mature and their risk profiles improve over time, ETAF aims to crowd in a broader pool of commercial and institutional investors.
MAS and PIDG are ETAF’s first close catalytic capital providers.
Temasek is also expected to contribute catalytic capital from its Concessional Capital for Climate Action, funded by Temasek’s community gifts, subject to definitive agreements.
DBS Bank is participating as a senior lender to ETAF.
GuarantCo, part of PIDG, has provided a guarantee for ETAF’s mezzanine financing structure, to enhance its risk-return profile and crowd in additional commercial investment.
Clifford Capital Asset Management, Clifford Capital’s wholly owned asset manager, will act as the fund manager for ETAF.
FAST-P’s ETAF, GIP and Industrial Transformation Program (ITP) were established to address Asia’s infrastructure needs by using blended finance structures to mobilize commercial and concessional capital towards green and transition investments.
The Singapore government has pledged up to $500 million in concessional capital under FAST-P, with the aim of catalyzing up to $5 billion in investments to support Asia’s green transition.
“ETAF’s successful first close demonstrates FAST-P’s growing momentum and traction,
“Through innovative blended finance models and guarantee mechanisms, FAST-P is bringing a broader coalition of partners together to meet Asia’s transition financing needs,” said Gillian Tan, Assistant Managing Director (Development & International) of MAS.
Munib Madni, Chief Executive Officer of the FAST-P Office, said that ETAF demonstrates how the FAST-P platform can bring together complementary partners, capital providers and risk-sharing solutions to develop investable transition finance vehicles.
“Achieving first close establishes a strong foundation for ETAF’s next phase of growth and for mobilizing additional capital towards Asia’s transition infrastructure needs,” he added.
Murli Maiya, Chief Executive Officer of Clifford Capital, said ETAF’s blended finance structure is designed to mobilize capital towards projects that accelerate the displacement of fossil fuel-based generation through grid modernization and other transition infrastructure investments, while addressing barriers that have traditionally constrained investment in transition opportunities.
“We look forward to working with our partners to scale and support Asia’s energy transition,” he added.
Philippe Valahu, Chief Executive Officer of PIDG, said the successful first close demonstrates the value of bringing together complementary forms of capital and expertise to address Asia’s transition financing needs.
“Bringing our de-risking capabilities to the fund with guarantee support and catalytic capital, PIDG is helping to mobilize additional private institutional investment,
“We look forward to continuing our collaboration with the partners to expand access to transition finance across the region,” he added.
As previously announced, PIDG said in a separate statement that it will provide impact management services to the fund to embed global best practice impact standards across the investment lifecycle.
It will bring robust, systematic impact management and monitoring expertise.
This includes helping develop best-in-class investment frameworks and governance to ensure capital allocation under the ETAF program which is aimed at delivering positive developmental impacts whilst mitigating potential risks.
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