Allied Climate Partners (ACP) is a philanthropic investment organization with a mission to accelerate the climate transition and improve livelihoods in emerging economies by increasing the flow of capital to bankable, climate-related projects and businesses. ACP selects regional investment managers in emerging economies and supports them with first-loss capital, expertise, and the mandate to address a critical financing gap at the early, risk-oriented stages of the development process for climate-related projects and asset-oriented businesses. Without this support, many projects and businesses struggle to attract the necessary capital to achieve their climate-related goals. By proving this model, ACP aims to induce commercially-oriented public and private sector investors to invest where they likely would not otherwise.

ACP recently announced the anchoring of its first regional fund—the Southeast Asia Clean Energy Fund II. Managed by Clime Capital, the fund is targeting at least $135 million to invest in projects in Vietnam, Indonesia, and the Philippines—countries that account for about 75 percent of the region’s population and 60 percent of current regional greenhouse gas emissions.

There is a critical financing gap at the early, risk-oriented stages of the development process. Without this support, many projects and businesses struggle to attract the necessary capital to achieve their climate-related goals. While early-stage project development represents the smallest portion of the overall funding needed for a project (approximately 5 percent), relatively few early-stage projects get financed. This early-stage capital is the hardest to raise for activities like technical and environmental assessments, modeling, permitting, and land acquisition. 

Estimates of how much additional capital countries will need to invest annually to address the costs of climate transition and adaptation vary—one recent study puts the need for external capital at $1.1 trillion per annum. However, investment in transition and adaptation projects globally has been overwhelmingly focused on the industrialized economies, where project risks are lower.

For the Southeast Asia Clean Energy Fund II, we expect:

• lifespan emissions avoidance of >150Mt CO2 over 20 years
• portfolio of at least 30 projects and climate-oriented companies, of which at least 18 are successful
• at least $100 million of crowded in capital by ACP

ACP will anchor a number of regional funds in Southeast Asia, Africa, Latin America and the Caribbean, and India with $235 million first-loss junior equity. These regional funds will in turn seek to raise an additional $600+ million in senior equity from multilateral development banks, development finance institutions, and private investors.

In the long-term, the Soros Economic Development Fund expects that ACP will have systemic impact as a proof of concept that can accelerate the deployment of capital into renewable energy investment and sustainable energy projects in the Global South. Through planned and targeted engagement, we anticipate that ACP will influence the risk appetite of multilateral development banks and development finance institutions.

As an impact investor, the Soros Economic Development Fund is able to take on higher levels of risk in order to achieve the programmatic goals of our climate investment portfolio—risks that conventional investors have shown to shy away from.