New impact investment fund targets listed Asian companies

April 23, 2020

BY Alexander Kalis

By Global Water Intelligence

The Climate Impact Asia Fund aims to secure exposure to equities with a positive impact on climate change. Water companies will be one of its key components.

A new fund is aiming to pump $500 million into listed Asian equities – including in the water sector – which are making a positive impact on the climate.

The Climate Impact Asia Fund was officially announced by UK and Singapore-based investment group Milltrust in March with a number of backers already in place.

It is now trying to reach its intial target size of $500 million, with water equities set to play a large role.

“Water is certainly a core component of the fund’s strategy,” Alexander Kalis, managing partner of Milltrust, told GWI, adding that amounts of water distributed, and water treated, are two of the pillars used to measure impact.

He added the $500 million could just be a starting point, saying: “We have a good pipeline of companies so we think we can definitely grow the fund to that number if not beyond. Sustainable investment is definitely at the forefront of investors’ minds.”

The fund is co-managed with Hong Kong-based Environmental Investment Services Asia Limited (EISAL). It is also a collaboration with WWF Hong Kong, and part of the fund’s fees generated from investments will be donated to support WWF’s conservation projects in Asia, including its environmental resilience programmes for improving Asian river deltas.

Target companies must have a market cap of at least $200 million and over 50% of their revenues and earnings must come from the low-carbon environmental goods and services sector. In the water sector, companies active in water treatment and distribution and wastewater treatment are the prime targets. Water companies already in the fund’s investment portfolio include Chinese utility Guangdong Investment, Japanese industrial and ultrapure specialist Kurita Water, and Filipino and Thai utilities Manila Water and Thai Tap Water.

Kalis highlighted Guangdong Investment, which has opportunities to expand its operations in China’s Greater Bay Area, as an investment with good prospects, saying: “Although it has utility-type characteristics, there are real structural growth opportunities as well.”

While the launch has coincided with the COVID-19 outbreak, Kalis said he believes the pressure on companies to continue to treat water during the crisis will ensure good performance. He added that the aftermath of the outbreak could see a shift towards new investment models, if people believe it is necessary to rebuild in a sustainable way.

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