Vietnam-based private equity firm Mekong Capital is seeking to raise at least $150 million for its debut impact investment fund that will target companies helping to combat climate change, according to a report by Private Equity International (PEI).
The fund will have a hard cap of $200 million, PEI reported citing a source. Mekong Capital declined to comment on a DealStreetAsia query seeking confirmation on the fundraising.
The vehicle – Mekong Earth and Forest Fund (MEFF) – will look at investments in firms adopting nature-based solutions for regenerating forests, increasing the health and fertility of soils, boosting biodiversity and protecting water bodies. The fund will also look at investing in solutions that improve the climate resilience of vulnerable communities in Vietnam, Laos, Cambodia and Thailand, according to an earlier statement of The Dutch Fund for Climate and Development (DFCD).
The organisation agreed to sign a €303,750 grant funding agreement with Mekong Capital to support the firm in finalising MEFF’s investment strategy, the statement noted. The development organisation will advise the fund on areas such as its ESG policy, carbon credit strategy and financing structure.
Founded by Chris Freund in 2001, Mekong Capital has advised five funds, two of which are currently active. Its latest investment vehicle, the $246 million Mekong Enterprise Fund IV, has to date announced seven investments, including Marou, Mutosi, HSV Group, LiveSpo Global, Rever, Gene Solutions, and Entobel.
Fundraising for climate investments is fast gaining steam in the region. In March, Singapore-based private equity firm Heritas Capital secured the first close of its Asia Impact First Fund (AIFF) at $20 million.
Earlier, Singapore-based ABC Impact (formerly ABC World Asia) was said to be raising at least $600 million for its second impact fund. This marks a doubling in fund size for the Temasek-backed private equity firm, which last closed its debut fund at $300 million in late 2019.
Private funding for climate technology companies in Southeast Asia reached $1.11 billion in the first 11 months of this year, marking a significant uptick in momentum for such businesses, according to DealStreetAsia’s The State of Climate Tech in SE Asia 2022.
Meanwhile, the H2 2022 performance by SE Asia’s PE funds has been noteworthy given a dramatic change in liquidity supply last year due to soaring inflation and rapid monetary tightening, as reported by DealStreetAsia recently.
Malaysian PE major Creador was the top performer last year, securing $700 million for its fifth growth vehicle. Other general partners (GPs) that closed funds in 2022 include Dymon Asia Private Equity ($650 million), Tower Capital Asia ($379 million), Mitsubishi-backed AIGF ($126 million) and Heliconia Capital-Yangzijiang Financial ($109 million).