The International Finance Corporation (IFC), part of the World Bank group, said it will provide up to $120 million in debt financing for Australian logistics property group LOGOS to develop the latter’s two logistics assets in the Greater Jakarta area.
The investment will deliver modern and high-quality logistics infrastructure in Indonesia’s rapidly growing e-commerce market while supporting business expansion and promoting competitiveness in the country’s warehousing sector, IFC said in a joint statement.
The estates, LOGOS Cikarang Logistics Park and LOGOS KLOG Cibitung Logistics Hub, are expected to generate 1,000 jobs during the construction phase along with hundreds of indirect jobs created by potential tenants, including global third-party logistic firms and large e-commerce groups.
Both properties are targeting a Green Mark award certification and are designed to comply with IFC’s green-building standards, according to the statement. This will include a wide range of sustainability initiatives to reduce greenhouse gas emissions during construction and operation.
This is the first green loan with IFC that LOGOS has secured, said LOGOS managing director Stephen Hawkins.
“Sustainability is a key driver of our business and we are actively incorporating sustainable initiatives across all our projects and operations regionally. IFC’s green loan is an important part of this commitment and will support us in delivering these two modern, high-quality and sustainable logistics estates for the Indonesian market,” he added.
Indonesia’s e-commerce sector is projected to reach a size of $124 billion by 2025, according to the Southeast Asia digital economy report by Google, Temasek and Bain & Company. However, IFC said there was still “a critical infrastructure gap” in the country, posing challenges for retailers and e-commerce players due to Indonesia’s archipelagic geography and the fragmented and nascent logistics sector.
“IFC’s green investment, in sync with the government’s sustainability agenda, will help address a significant lack of adequate warehousing space in Indonesia, which is critical in the wake of an e-commerce boom amid the COVID-19 pandemic,” said Alfonso Garcia Mora, IFC vice president for Asia and Pacific.
Financing for the climate investing theme is becoming more mainstream. In Vietnam, where LOGOS announced its $350 million joint venture in August, IFC is providing a $212.5 million package for commercial lender VPBank to cover SME loans as well as climate-related projects.
Meanwhile, IFC has also committed to Zurich-based impact investor responsAbility Investments AG’s climate debt fund, which could reach as much as $200 million to focus investments on Sub-Saharan Africa and South and Southeast Asia.
Earlier this month, Australian private equity firm Adamantem Capital received commitments worth A$160 million ($118.5 million) from two government-owned funds for its second fund to drive emission reduction across its portfolio.