HSBC and Singapore-based investment company Temasek announced today the launch of Pentagreen Capital, a new debt financing platform focused on accelerating the development of sustainable infrastructure in Asia.
The new company is being launched with $150 million of capital provided by founding shareholders HSBC and Temasek, and aims to deploy $1 billion in loans within five years.
Strategic partners include Asian Development Bank and Clifford Capital, providing origination, technical support and project finance expertise.
Connie Chan, Managing Director, Investment, Financial Services at Temasek, said:
“As a long-term investor, we are committed to catalysing sustainable solutions that will contribute to the transition to net zero. We believe that we are in a critical decade to reverse the effects of climate change, and partnerships such as this demonstrate Temasek’s unwavering commitment to playing our part for a more sustainable world where every generation can prosper.”
According to the founding partners, the new platform aims to help bridge the funding gap for sustainable infrastructure needed to address the challenges and opportunities presented by climate change. Pentagreen intends to remove the barriers to capital for marginally bankable and innovative sustainable infrastructure projects through active collaboration, providing technical assistance and project advisory services, and the deployment of blended finance at scale.
Blended finance brings together public or philanthropic capital and private funding through a common investment structure, designed to attract large-scale institutional capital, allowing public financiers and other donors to use a small amount of their own resources as a first loss to mobilize large amount of private capital. Blended finance vehicles are de-risking instruments that enable investors to invest in certain types of investments that have high perceived risk profiles, such as new climate mitigation-related technologies and infrastructure.
Pentagreen will initially focus on clean transport, renewable energy and energy storage, and water and waste management opportunities in Southeast Asia. In the future, the platform may add other geographies and consider projects in areas including climate adaptation, agriculture and land use, and technology-led solutions.
Stuart Lea, Head of Global Banking South Asia and Global Head of Real Assets Finance at HSBC, said:
“In Asia, many infrastructure projects face varying degrees of barriers to bankability. Pentagreen’s goal is to help remove those barriers and unlock other sources of capital. Market development for infrastructure financing requires long-term commitment and patient capital, which HSBC is proud to provide alongside our partners at Temasek.”
Pentagreen will be led by CEO Marat Zapparov, who joins the company from the World Bank Group’s International Finance Corporation (IFC), where he headed the Asia Project Development and Investment unit, mandated to fund early stage asset and project development and transaction incubation across the real assets sectors. Prior to joining IFC, Zapparov founded energy and infrastructure project development and advisory Unity Development, and held infrastructure and project finance-related positions at Clifford Capital and HSBC.
“I am excited to lead a company formed by two world-class institutions that are committed to the goals of the Paris Agreement and to developing the infrastructure ecosystem in Asia. Pentagreen is ideally positioned to be an alternative provider of debt capital to accelerate the development of sustainable infrastructure in Asia. We aim to fill the gap between traditional financing options from banks and development financiers and catalyse the flow of capital to innovative projects by bringing flexible debt financing solutions to the table.”