Armstrong’s cleantech breakthrough

"There was no benchmark for private equity in dedicated clean energy funds for Southeast Asia," says Andrew Affleck, Armstrong's managing partner, speaking of initial challenges in raising the fund. "Investors needed to see a number of the macro drivers for renewable in Southeast Asia in order to get comfortable outside of our team's ability to deploy money."

These drivers included the evolution of government policy in support of renewable energy and the gradual fall in cost for items like solar panels, which have helped make renewable energy projects a more viable proposition.

It is against this backdrop that the fund - which officially launched in May 2012 - managed to find its initial commitments from a handful of European development finance institutions (DFIs) such as GEEREF and DEG, and an Asian-based corporation, leading to a first close last August.

International Finance Corporation (IFC) soon followed, committing $20 million in May.

Then, with additional pledges from French DFI Proparco and Geneva-based Unigestion, the fund was able to surpass its initial target of $150 million, reaching final close of $164 million. In total, Armstrong has signed up 10 investors from Europe, North America and Asia.

The 10-year fund will provide development capital to small-scale renewable energy and resource efficiency projects in Southeast Asia. Typical projects will generate power of up to 10 megawatts from renewable energy resources, such as solar, hydro and wind.

The fund will makes 10-15 investments of $5-25 million each, although this could increase with co-investment.

"This is a sector that has huge need and potential scale," Affleck explains, "so $164 million is really a drop in the ocean to what could be needed. Having partners like IFC, DEG and other DFIs that would willingly be involved in co-investment is real bonus for us and for the developers we are currently talking to."

The fund has backed two projects so far. In August, it announced a commitment of up to $30 million to Annex Power to finance the development of solar photovoltaic and biogas power projects in Thailand, Indonesia and the Philippines.

Three months earlier, it took a 60% interest in Symbior Elements to develop and operate solar projects in Thailand. Affleck adds that Armstrong has number of deal in its pipeline in Indonesia.

"The majority of our pipeline is across Thailand, the Philippines and Indonesia, mostly because that is where we have seen the more advance policies towards supporting private investment in renewables," he adds. "However, we are also seeing a number of deals in Vietnam and Cambodia."

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• Topics
• Fundraising
• Southeast Asia
• Cleantech
• Armstrong Asset Management
• Cleantech
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• Southeast Asia