Surging Performance by The Climate Impact Asia Fund Shows the Appeal of Impact Investing

We are delighted to share with you that Milltrust’s Climate Impact Asia Fund, managed in partnership with Environmental Investment Services Asia Limited and in collaboration with WWF-Hong Kong, surged in June and continues its strong performance in July as at the time of writing. Contact us fo more details.

The fund’s strong performance has benefitted from:

• Growing M&A activity in the Asian renewable energy sector, as evidenced by a takeover bidding war in the fund’s largest holding Infigen Energy between (Philippine conglomerate Ayala Corp-backed) UAC Energy and Spanish global energy leader and the world’s number-one producer of wind power, Iberdrola. Elsewhere, KKR has made a successful 11.9% tender for First Gen, another key position held by the fund. And the recent announcement of a “possible” privatization for Beijing Jingneng Clean Energy should add further positive attribution to the Fund’s NAV in the coming months.
• Strong double-digit % returns coming from our new energy vehicle and associated lithium-ion battery investments including CATL, BYD and Samsung SDI. The future of new energy vehicles is forecast to play a major role in the post coronavirus world, and China has a long-held ambition not only to provide the supporting policies and infrastructure to encourage fast domestic adaption but also to take the lead in providing the required technology to disrupt the traditional auto market.
• Increased incentives announced by China’s Ministry of Finance to boost its budget for renewable power subsidies to 92.36 billion yuan ($13 billion), 7.5% more than it spent last year, with solar power incentives to rise by 14% compared to last year’s level (higher than expected), which has been particularly positive for the fund’s China solar exposure holdings: Xinyi Glass, Xinyi Solar, and Xinyi Energy. In particular, as a yieldco, Xinyi Energy has a dividend yield of 5.5% which, combined with the favourable policy tailwinds, should help facilitate earnings as well as dividend growth for many years to come.

In line with its objective of generating positive impact while maximising shareholder returns, the fund’s 35 companies’ collective low carbon environmental operations are forecast to contribute a positive impact of:

• Avoiding 354 million metric tons (MT) of CO2 emissions, equivalent to taking 86.5 million cars off the roads.
• Distributing 5,816 MT of clean water and treating 6,382 MT of polluted water to over 42 million households every year.

The fund also proudly makes revenue-based donations to support WWF-Hong Kong’s regional biodiversity and species extinction-focused conservation programmes. WWF-Hong Kong’s latest actions have focused on preventing the local extinction of the Chinese white dolphin population (Sousa chinensis) in the Pearl River Delta.

Alexander Kalis, Managing Partner at Milltrust International and Chairman of The Climate Impact Asia Fund’s Investment Advisory Committee said: “We are thrilled that The Climate Impact Asia Fund’s low carbon climate impact investment strategy is paying off for investors while also helping the transition to a sustainable economy which future generations are so reliant on us to deliver. We need the private sector to recognise that doing good does not come at the expense of returns, and we need their action now”.

Please contact Alexander Kalis on [email protected] to schedule an introductory call or to request any more information on The Climate Impact Asia Fund.

Sources: Environmental Investment Services Asia Limited, Company Reports, Bloomberg, EPA, IRENA, Statista, MUFG and WWF-Hong Kong.

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