Hong Kong, 5 December 2023 – ADM Capital, the Asia Pacific private credit specialist, today announced the launch of its Asia Climate-Smart Landscape Fund (“ACLF” or “the Fund”) for Indonesia.
The Fund has secured seed commitments from Ceniarth, the David and Lucile Packard Foundation, the John D. and Catherine T. MacArthur Foundation, Margaret A Cargill Philanthropies and RS Group and is targeting total commitments of up to USD200 million in further closes.
ACLF, which is ADM Capital’s first Indonesia-focused impact fund, aims to address the significant funding gap for small and medium-sized enterprises engaged in sustainable agriculture, agroforestry and aquaculture by providing medium-term senior secured lending. The fund also links 50% of carry to achieving impact, which will be verified annually.
The U.S. International Development Finance Corporation (“DFC”) is providing a 50% guarantee across the fund at the asset level. Also participating in the guaranty are the United States Agency for International Development (“USAID”), Rabo Foundation and the Australian Government’s Department of Foreign Affairs and Trade (“DFAT”).
The blended finance fund will set both financial and impact targets for projects. Impact targets include enhancing livelihoods and increasing employment, achieving fairer gender ratios, improving land use management, and reducing greenhouse gas (“GHG”) emissions.
“The launch of ACLF builds on ADM Capital’s longstanding leadership in integrating ESG factors into the underwriting process to manage risk and enhance value,” said Chris Botsford, Co-founding Partner and Chief Investment Officer.
“Indonesia is home to the third largest rainforests globally and faces constant challenges from rapid development,” he said. “ACLF represents an exciting new capital deployment model. It brings together leading blended finance proponents, impact investors and NGOs in a fund designed to empower SMEs and smallholder farmers to act more sustainably while enhancing their livelihoods.”
Stefan Freeman, Head of Investments for Ceniarth, said: “To date, we have had limited investment exposure to Indonesia, a country with tremendous potential for impact given our emphasis on smallholder livelihoods and ensuring just solutions to climate adaptation. ACLF has taken a thoughtful, blended finance approach to the fund and represents an important, anchor investment for us in this new geography.”
In building the Fund and setting its impact strategy and baselines, ADM Capital has several long-term partners with extensive experience in Indonesia and in responding to climate challenges. Among these partners are Partnerships for Forests, a UK aid-funded programme, and Convergence, a global blended finance network.
“DFC is proud to support ADM Capital’s efforts to address the financing gap for SMEs in Indonesia by increasing access to financing for those SMEs engaged in sustainable agriculture, land regeneration, and forest protection. DFC is committed to unlocking capital to support Indonesia’s private sector and its contributions to the country’s economic growth,” said James Polan, Vice President of DFC’s Office of Development Credit.
“Vehicles like the Asia Climate-Smart Landscape Fund are paving the way for integrating climate finance and gender-lens investing alongside addressing the needs of local communities,” said Joan Larrea, CEO of Convergence.
Indonesia, the world’s fourth most populous country and the largest economy in Southeast Asia, is increasing its emphasis on supply chain visibility and Environmental and Social (“E&S”) performance. The country’s Nationally Determined Contribution targets under the Paris Agreement include reducing GHG emissions by 31.89% to 43.20% by 2030.
With the Indonesian government focused on investment into agriculture to reduce emissions and poverty, and smallholder farms accounting for more than 85% of all cocoa, rubber and coffee production as well as 40% of all palm oil produced in Indonesia, ADM Capital believes that ACLF’s partnership model and financing for SMEs can contribute positively to Indonesia’s environmental and social agendas.
Managing ESG risk has long been embedded in ADM Capital’s investment process. In 2008, the firm was the first Asia ex-Japan fund manager to sign up to the UN-supported Principles for Responsible Investment. Since 2012, the ADM Capital platform has managed its private credit lending against IFC Performance Standards, requiring third-party ESG due diligence and an Environmental Social Action Plan (ESAP) to mitigate identified risk in transactions. An ESAP is incorporated into loan documents as a potential event of default with non-compliance. The firm also asks companies to report on E&S key performance indicators.
The launch of ACLF represents the firm’s first milestone under its ADM Capital Climate strategy, which was established in 2022 to help finance the vast shifts underway in the power, food, and land use sectors in Asia.
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About ADM Capital
With more than 25 years’ experience in private credit across Asia Pacific, ADM Capital is a leading alternative credit fund manager focused on providing flexible capital solutions to the region’s mid-market corporates and entrepreneurs.
ADM Capital is active across developed and emerging APAC markets and currently manages ~USD2bn on behalf of its global institutional client base. It has completed USD6bn of investments across 220 loans since inception.
Headquartered in Hong Kong with six regional hubs, ADM Capital has successfully invested across market cycles since 1998, prioritising downside protection, the preservation of capital and risk-adjusted performance. The firm’s secured direct lending strategy seeks to generate uncorrelated returns and alpha over liquid credit markets via proprietary sourcing, tight deal controls and strong collateral packages.
ADM Capital believes that the social and environmental aspects of business ultimately influence performance and refinancing risk. The firm therefore integrates sustainability factors into every investment diligence process and loan document, and works closely with the ADM Capital Foundation, an impact-driven, environmentally-focused foundation seeking to make positive change across APAC.
More information on ADM Capital can be found at https://www.admcapital.com