Armstrong South East Asia Clean Energy Fund readies for first investments

Armstrong South East Asia Clean Energy Fund expects to make first deals in small-scale solar and mini-hydro sectors of SE Asia’s emerging markets. Key feature -bundling of multiple assets in portfolios for trade sales; projected return at 20%.
Andrew Affleck, Armstrong Asset Management
Andrew Affleck, Armstrong Asset Management
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Aug. 13, 2012 - PRLog -- Singapore – Armstrong South East Asia Clean Energy Fund (“Armstrong fund”) anticipates making first deals in the solar and mini-hydro sectors of Southeast Asia’s emerging markets during the next months. The fund today formally announced its first close at US$65 million led by European development finance institutions (DFIs) GEEREF and DEG, and an Asian-based corporation. Targeting a full fund size of US$150 million, the Armstrong fund focuses on small-scale power generation and resource efficiency projects and aims to provide early-stage capital to infrastructure developers in Thailand, Indonesia, Malaysia and other emerging markets.

“The participation of GEEREF and DEG is strong validation of the Armstrong fund investment strategy and attests to our team’s competence and potential to operate in this fast-growing sector within Southeast Asia,” said Andrew Affleck, managing partner, Armstrong Asset Management on the new investment team’s first fund. “To date the team has originated a strong pipeline of potential deals and detailed negotiations are underway. We are hopeful of completing one to two key deals soon. Small-scale solar and mini-hydro are two priority sub-sectors the team is currently focused on.” The fund’s second close is expected by year-end, with the third and final close due by July 2013.

Differentiated, Aggregation Model
The Armstrong fund intends to make a total of 10 to 15 investment deals, each ranging from US$5 million to US$12 million over its 10-year life. Preferred projects will generate under-10MW of renewable power from solar, wind and mini-hydro sources. A key feature of the Armstrong investment strategy is the aggregating or bundling together of multiple small-scale operational project assets in attractive portfolios and investments being realised upon trade-sales. A gross return of 20% is projected, alongside significant, quantifiable development impacts.

Mr Affleck commented, “The Armstrong strategy intentionally capitalizes on Southeast Asia’s regional diversity, in contrast to other investors who tend to shy away from smaller deal sizes. We are excited as we see the fund’s innovative and differentiated model to be extremely well-suited for the policy framework here and, more importantly, effective in addressing rapidly growing energy demands. From our own experience implementing this investing model in Europe, we envisage Southeast Asia to become a highly attractive market for small-scale renewable energy projects.”

Attractive Market for Small-scale Renewable Power Generation
Cyrille Arnould, head of GEEREF and Gunter Fischer, Principal said, “We’re glad to play a catalytic role for this first-time clean energy fund dedicated to Southeast Asia because it offers a clear and compelling strategy. It is managed by a professional investment team with the depth and breadth of experience of operating and navigating the region. It promotes sustainable energy development and can provide financing for small scale early stage projects that entrepreneur teams would otherwise not have access to. The Armstrong fund is a good example of GEEREF’s “People, Planet, Profit” investment strategy.”  

Markus Bracht, Vice President Equity/Mezzanine at DEG’s representative office in Singapore said, “The Armstrong fund is a unique investing opportunity that DEG is happy to partner in order to improve the energy security of emerging economies and to create better prospects in a high-growth region with strong fundamentals. It is our hope and expectation that by filling the infrastructure-spending gap, the Armstrong fund can help catalyse much needed investments in private-sector renewable energy projects.”  

Proactive ESG Commitment Integral to Sustainable Returns
For investment deals, top-line criteria include investee companies meeting environmental, social and corporate governance (ESG) requirements at every stage of the investment process. The Armstrong fund draws on a bespoke Social and Environmental Management System designed to IFC Performance Standards and incorporating additional guidelines by the EIB and EU. Fund manager Armstrong Asset Management is signatory to the United Nations Principles for Responsible Investment (UN PRI) and has Asian ESG expert and member of the UN PRI advisory council Melissa Brown on its external Expert Panel to advise the Armstrong management team.

“We believe a proactive commitment to ESG is crucial to achieving sustainable returns,” reiterated Mr Affleck. “Towards the second close, we are in talks with more DFIs, companies, family offices and institutional investors seeking access to clean energy funds in this region. Typically, they would subscribe to a similar position on ESG benchmarks.”

Andrew Affleck has 22 years of asset management and investment banking experience in the Asian region, having focused on clean energy investments for the last 7 years. Prior to setting up Armstrong Asset Management, he was CEO of Low Carbon Investors Ltd, a dedicated global clean energy fund management group with over US$300 million under management. During his four year tenure, he co-led the firm’s transformation from a US$50 million single fund cleantech venture business to a multi-fund clean energy infrastructure asset manager. The infrastructure funds have led to operational experience gained through the development and acquisition of 28 small-scale (sub 10MW) solar and wind projects which in aggregate amount to 83MW.

About Armstrong Asset Management
Armstrong Asset Management is an independent asset manager, based in Singapore, focused on the clean energy sector in Southeast Asia’s emerging markets. Armstrong has announced its first fund will invest in small-scale infrastructure projects having achieved a first closing at US$65 million. The Armstrong South East Asia Clean Energy fund (“Armstrong fund”) is set to be the only operational clean energy fund of its kind in the region. Armstrong’s multidisciplinary team consists of 7 investment professionals with deep sector knowledge and cultural experience from a collective 68 years of Southeast Asia operating experience. As a responsible investor, Armstrong believes integrating sustainable, environmentally friendly practices into day-to-day activities delivers tangible benefits, creates additional opportunities, benefits society and reduces risk. Such an ethical approach leads to follow on opportunities and improved financial returns especially when the true costs of increasingly scarce natural resources are considered.

GEEREF is an innovative Fund-of-Funds, providing global risk capital through private investment for energy efficiency and renewable energy projects in developing countries and economies in transition, it aims to accelerate the transfer, development, use and enforcement of environmentally sound technologies for the world's poorer regions, helping to bring secure, clean and affordable energy to local people. The fund was initiated by the Directorate General for Environment and Directorate General for Europe Aid Co-operation Office (AIDCO) of the European Commission. GEEREF is both a sustainable development tool and a strong support for global efforts to combat climate change. It is sponsored by the European Union, Germany and Norway and is advised by the European Investment Bank Group (European Investment Bank and the European Investment Fund).

About DEG
DEG – Deutsche Investitions- und Entwicklungsgesellschaft, a subsidiary of KfW, has been financing the investments of private companies in developing and emerging market countries for 50 years. As one of the largest European development finance institutions, it promotes private business structures to contribute to sustainable economic growth and improved living conditions. DEG invests in profitable projects that contribute to sustainable development in all sectors of the
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