Hong Kong-based financial conglomerate China Everbright Limited has launched a new private equity fund to raise an aggregate of 20 billion yuan ($2.82 billion) to finance environmental and sustainable businesses across countries and regions along China’s Belt and Road Initiative.
The ESG fund will value the environmental, social and governance factors in potential investments.
The ESG fund, which was formed in a dual-currency structure, targets to raise 20 billion yuan in total with the first closing of 10 billion yuan ($1.41 billion), said China Everbright Limited in a WeChat post on Thursday.
Claimed to be China’s first ten-billion-yuan ESG fund, the vehicle will invest in green energy, green manufacturing, and green living enterprises that provide products and services to China, countries along the Belt and Road Initiative, and other businesses related to the Beijing’s development strategy, said the firm.
Such investments include start-up investments, equity investments, mergers and acquisitions, mezzanine financing, takeovers, exchangeable debt, bridge facilities, and fund investments.
The Belt and Road Initiative, shortly known as the B&R, is a global development strategy adopted by the Chinese government in September 2013 that involves infrastructure development and investments in nearly 70 countries and international organizations in Asia, Europe, and Africa.
According to a regulatory filing with the Hong Kong Stock Exchange (HKEX) on April 21, China Everbright Group, the state-owned parent company of China Everbright Limited, and its two affiliates have each committed 500 million yuan ($71 million) to an RMB-denominated fund of funds (FOF) as part of the ESG investment platform to look for projects in the home market. The FOF plans to raise no less than 5 billion yuan ($706 million).
The state-owned financial service group is leading China’s rising efforts to adapt to the ethical investment trend that has swept the developed economies in the past decade. According to the Global Sustainable Investment Alliance, 39 per cent of all professionally managed assets, valued at $31 trillion, was invested based on ESG inputs in late 2018, compared to the low- to mid-single digits at the start of the decade.
In February, New York-based KKR & Co, which is known for its multibillion-dollar buyout deals, closed its first global impact fund with $1.3 billion in capital commitments, above a $1 billion target, as the company looks for opportunities in companies whose core business models provide commercial solutions to an environmental or social challenge.
Moody’s also indicates that ESG issues are increasingly influencing investment decisions. The American financial service provider foresees a significant increase in public interest in preserving natural assets, such as land, water and living things, over the coming years.