ADB kick-starts three climate change technology funds

The Asian Development Bank (ADB) is investing USD60 million to help set up three venture capital funds, and hoping it can leverage an additional USD600 million from the private sector, lured by the funds' dedicated to nurturing new climate change technologies. They are primarily targeting the markets of China and India.

The three funds - Aloe Environment Fund III, Keytone Ventures II, and VenturEast Life Fund III - each get USD20 million to invest in early-stage funding of companies that specialise in technology that mitigates climate change.

"Climate change will hit Asia hard in coming decades. Investing in these venture capital funds will help channel finance into innovative and affordable technologies that tackle the challenge of climate change in ways that are suited to developing Asia," said Philip Erquiaga, director general of ADB's Private Sector Operations Department.

Costs to developing countries of climate change, including achieving greenhouse gas reductions, are expected to be in excess of USD100 billion per year by 2030, according to the ADB. For Asia and the Pacific costs are around $40 billion per year between now and 2050.

The ADB's new move on climate change funding is by no means a one-off. Since the 2007 Bali Action Plan it has primed the pump on a range of new investment funds while directed other policies to take account of the growing requirements for solutions to climate change.

The Aloe Fund aims to raise around USD200 million and will be managed by Aloe Private Equity. It will invest in Asian companies whose technologies can be used in the region, with a particular emphasis on transferring technology and know-how.

The Keytone Fund will be managed by Keytone Capital Partners II. Its $200 million fund will be focused largely on climatech firms in sectors such as light-emitting diodes, industrial energy efficiency, electric vehicle and power batteries, and waste treatment. It will make around 15 investments of $10 million-$15 million each.

VenturEast Fund is expected to invest a total of $200 million into companies in the Indian market that seek to apply proven technologies from other regions. Its climatech investments will be divided between healthcare, sustainable agriculture, and clean environment technologies. It will make minority investments of $5 million-$15 million in 15-18 companies. VenturEast Mauritius Investment Advisors will manage the fund.