A joint venture between First Eastern Investment Group and Sustainable Development Capital LLP (SDCL) has set up a project finance programme of up to S$200 million ($160 million) for energy-efficient facilities in Singapore’s manufacturing sector.
SDCL Asia will initially focus on the city-state’s industrial sector and work closely with the Singapore Economic Development Board to provide upfront capital for retro-fitting manufacturing facilities to be more energy-efficient.
The capital would be provided as project finance, says Glen Plumbridge, director at SDCL.
Cooling systems, for sectors such as the semiconductor and pharmaceutical industries, will be a particular focus, he adds.
Up to S$200 million will be provided in the initial pilot stage, with the potential for expansion later, Plumbridge tells AsianInvestor.
Heavy industry could present potential investment opportunities in the longer term, he says. One example is capturing the so-called ‘waste heat’ that is released from industrial processes and using it to generate energy.
The initiative by SDCL Asia is the first privately funded capital programme in Singapore for energy efficiency projects. The city-state has set a target of reducing greenhouse gas emissions by 7-11% by 2020, with energy efficiency seen as a key method.
“Energy-efficient programmes have been around for 30-odd years,” says Plumbridge. “What’s new is that over the last five years there has been a far greater focus on energy efficiency, for a number of reasons.”
They include climate change and energy security – the latter is of particular significance for Singapore, which imports much of its energy needs in the form of natural gas from Indonesia and Malaysia.
SDCL Asia was formed in February last year as a 50:50 joint venture between Hong Kong-based private equity firm First Eastern and SDCL, a UK financial advisory and investment firm that focuses on large-scale sustainable development projects.
As part of the agreement, First Eastern took an undisclosed stake in SDCL. Shortly afterwards, the UK firm announced plans to raise $500 million to invest in projects in Asia related to water treatment, sustainable land management and low-carbon transport systems.