Indonesia's SWF, China's CATL, CMBI to set up $2b fund for electric vehicles

Indonesia's SWF, China's CATL, CMBI to set up $2b fund for electric vehicles

Photo: Michael Marais / Unsplash.com

Sovereign wealth fund Indonesia Investment Authority (INA), Chinese battery manufacturer Contemporary Amperex Technology Co., Limited (CATL), and CMB International Capital Corporation Limited (CMBI) have signed a Memorandum of Understanding (MoU) to establish, and invest in, a $2 billion fund targeting electric vehicles.

All parties will jointly invest in the formation of the Green Fund focusing on building the EV value chain in Indonesia, from upstream to downstream. This is part of efforts in supporting Indonesia’s plan to reach carbon neutrality by 2060.

The announcement was made at the B20 Summit Indonesia conference on the sidelines of the G20 Summit in Bali.

By leveraging Indonesia’s resources for sustainable raw materials, coupled with the growing domestic market as well as the strengths and resources of each party, the Green Fund is expected to deliver long-term and sustainable returns for investors. With the joint efforts, INA sees the potential of the fund to reach a value of $2 billion.

Meanwhile, the global EV sector also presents trillions of dollars in opportunity across the EV value chain.

“Strategic partnership with CATL as a global leader in energy tech innovation and CMBI as a leading financial institution with a strong track record in the EV value chain is in line with INA’s mission to create long-term prosperity for future generations through sustainable investment,” said chairman of INA’s board of directors, Ridha Wirakusumah, in a statement.

Indonesia is home to 22% of global nickel reserves, the key component of lithium-ion (Li-ion) batteries that power EVs. In 2020, the government banned the export of nickel to secure the development of the downstream industry in Indonesia. The country seeks to develop an upstream-to-downstream nickel supply chain, starting from the extraction of the mineral, to manufacturing electric vehicles.

These efforts are attracting a number of investors to invest in the country’s EV ecosystem.

INA was launched in early 2021 with $5 billion from the government. It has garnered more than $20 billion of co-investments from funds including Singapore’s GIC and Abu Dhabi Investment Authority (ADIA) and is looking at infrastructure assets, said its top executive to Reuters.

In September, INA signed a $300-million financing facility with travel tech unicorn Traveloka. BlackRock, Allianz Global Investors, and Orion Capital Asia were among the other investors who joined the financing round.

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