British International Investment (BII) has launched British Climate Partners (BCP), a £1.1 billion ($1.48 billion) vehicle dedicated to mobilising private capital to support the energy transition in Asia’s emerging markets.
The initiative is part of the UK development finance institution’s new five-year strategy to support development goals in emerging markets, particularly in climate finance. It aims to deploy £15.5 billion ($21 billion), including partner capital, across its portfolio in sub-Saharan Africa and emerging Asia.
For every dollar BII deploys through the BCP, it aims to attract three times as much commercial capital to climate finance in the region, said BII CEO Leslie Maasdorp in a briefing.
“At the heart of the new five-year strategy is this desire and intent to stretch public dollars and taxpayer money,” said Maasdorp.
“There’s a bigger imperative to mobilise private capital, but also because there’s a broader recognition today that public resources alone will never be able to fill the financing gap for development.”
“Public resources alone will never be able to fill the financing gap for development.”
Maasdorp noted that the biggest developed economies, including the UK, are increasingly fiscally constrained amid rising spend on national security and defence, “which has led to less resources being available for development and overseas development systems”.
BCP will work with private investors, including sovereign and financial institutions, to deploy capital in a combination of equity platforms and mezzanine finance to develop and scale climate projects, including allocations to fund managers. BII expects that the bulk of the capital, or some £900 million ($1.2 billion), will be equity-based investments.
The focus will be on countries with rising energy demand and coal-based energy networks, including India, the Philippines, Indonesia, Vietnam, Thailand, and Malaysia.
“Energy security is at the heart of every government’s agenda, whether it be Asia, Southeast Asia, and more globally. And we recognise that that presents a major opportunity for us to lead in and invest more in the energy domain, and specifically, clean energy,” noted Maasdorp.
Investment opportunities include energy transmission and storage, and EV infrastructure. Further ahead, it could include hard-to-abate sectors such as green steel and cement.
Investment opportunities include energy transmission and storage and EV infrastructure.
“The idea here is to try and reduce early-stage risks and potentially offer higher returns to attractive commercial investors,” said BII managing director and Head of Asia Srini Nagarajan.
“What we are trying to do as BII is to be more catalytic in nature and make sure that we get commercial investors alongside us, so that we can amplify the extent of impact we are able to create.”
The BCP is likely to be run out of Singapore, BII’s executives added.
Between 2020 and 2024, BII has invested a cumulative $2.9 billion of climate finance, mobilising $1.6 billion in the same period. The share of climate finance assets in BII’s portfolio has grown from 15.4% in 2020 to 26.5% in 2024.
BII expects that at least 40% of new investments, including BCP’s initiatives, will qualify as climate finance. This is up from its previous target of 30% set during its last strategy period.
Apart from the BCP, BII intends to deepen its commitments to the frontier markets in its portfolio, including in Asia, Maasdorp said.
The institution will commit at least 25% of its new investments to the Least Developed Countries, designated by the United Nations as countries with the most development constraints such as scarcity of financial resources and low and unequally-distributed income.
