Decarbonising energy in Southeast Asia: A bank and regulator’s perspective | FinanceAsia

The need to connect the world energy system with the 1 is essential. 5°C purpose has never been more powerful. August 2023 marked the hottest month on record, surpassing even the document set in July 2023 by a substantial margin. The severity and frequency of climate change impacts are rising, highlighting the urgent need for activity.

According to the International Energy Agency ( “IEA” ), global carbon dioxide ( CO2 ) emissions from the energy sector reached a new record high of 37 billion tonnes ( Gt ) in 2022, 1 % above their pre-pandemic level, but are set to peak this decade.

Piyush Gupta, the CEO of DBS Bank, highlighted some of the important difficulties financial institutions are facing as they move to the energy market.

One important issue, according to Gupta, is the untested economy of many new technology. While some industries have fairly good systems solutions, others lack feasible options. Although hydrogen may hold promise, it is now too far beyond the reach of use. Even where there is systems, these innovative solutions ‘ cost points and economics frequently differ from those of fossil-based energy sources or different segments.

The economy are different when comparing the cost of solar production in regions with high thermal efficiency, like China or India, to those with cloud cover, like the tropic, according to Gupta. Elements such as the cost of land, which can be considerable for tasks requiring large places, and the costs associated with store, intermittency, and network upgrades further complicate the financial viability of projects.

In fact, some initiatives are not simple to finance based only on commercial viability.

Gupta was speaking at a screen debate at the Singapore state investment Temasek’s monthly sustainability-focused function, Ecosperity, from April 15 to 17.

The need for relevant infrastructure spending is the next problem identified by Gupta. While a job may be initiated, if the necessary investments in another system components, such as the network, are not made continuously, the site’s potential is compromised. Thus, it is crucial for a financial institution to take into account the wider communication and infrastructure requirements beyond the task itself in order to assess the viability of the investment.

The Asean nations ‘ risk prices, as discussed by Gupta, have an impact on project viability and prices. Foreign exchange threat and royal risk are included in these risk premiums. Some nations in the area are not regarded as investment-grade, which adds to the sovereign risk premium. Foreign trade risk is another important issue, as funding for these projects frequently is in US dollars while profits are generated in regional currency. Significant financial difficulties can be caused by this gap.

Finally, Gupta shared that project funding is influenced by the off-takers reliability, especially in the energy sector, where political considerations may affect payment reliability. Regime modifications can add another layer of complexity to venture financing by raising doubts about the off-taker’s commitment to completing its legal obligations. Together, these problems add to the difficulty and complexity of funding regional system jobs.

But, while difficulties exist, concerted efforts are underway to mitigate them, with continued growth of remedies aimed at overcoming these roadblocks.

Gupta, who spoke to FinanceAsia on the outside of the occasion, put forth one like solution, which he believes can have a significant influence on the sector’s journey to zero.

One of the most important components of a toolbox of solutions to climate change is establishing a reliable and open global graphite market. A strong global carbon market is a powerful tool for the personal sector to move money from developed to developing areas. This in turn has the potential to have a significant effect by enabling emerging markets to obtain funding for sustainable development tasks, which are required to speed up the transition to a low-carbon business. ”

According to Gupta, pursuing the implementation of cross-border and export industry also offers a considerable option. “These areas enable resource countries to develop capacity, size, and engineering without bearing the price, as other states purchase their authority, ” he noted.

To put this in perspective, the demand for coal funds could increase by 15 days or more by 2030 and up to 100 days by 2050. By 2030, the use and buying of carbon credits was reach$ 50 billion, subject to the successful implementation of the Article 6 code adopted at COP26.

Singapore’s online zero journey 

Singapore has set a goal of achieving net zero emissions by 2050. Singapore aims to have net-zero emissions from this industry by the same deadline given that its energy sector accounts for 40 % of its emissions. By importing fresh power from the Asean area, the nation intends to accomplish this goal.

Ngiam Shih Chun, chief executive, of the Energy Market Authority ( EMA ) of Singapore, said that while “Singapore has limited renewable energy resources, the country can access low-carbon electricity that is abundant in the region by connecting to regional power grids. This also encourages the growth of solar energy in the area and opens the door for the Asean Power Grid vision to become a reality. ”

The country has the target set to import up to fourgigawatts ( GW ) of low-carbon electricity by 2035, making up around 30 % of Singapore’s electricity supply then. EMA granted contingent certifications to trade up to 4 in 2023. 2 GW of low-carbon energy from Cambodia, Indonesia, and Vietnam. Companies are now completing feasibility studies and obtaining regulatory approvals from transit and source nations.

The projects are physically and economically feasible, and the source nation and Singapore are working together in a beneficial way, Chun said.

As Singapore actions steps down from its energy sector, Chun mentioned that these jobs are also pioneering because cross-border power trading is now constrained in the area. Their large size is also something to keep in mind, for instance, a 1,000-kilometer high voltage direct current wire from Vietnam. They are thus facing regulatory problems.

But, once cleared, they are expected to accelerate the development of cross-border buying, according to Chun.

The Laos-Thailand-Malaysia-Singapore power project, for example, took years to negotiate but is now the first successful cross-border power trading initiative across four Southeast Asian ( SEA ) countries. To improve trading volume and make multi-directional trading more profitable, discussions are currently being conducted. This advancement is in line with the Asian power grid’s goal, which promotes cross-border trading and benefits various SEA nations.

A national hydrogen strategy, which outlines the potential pathways for gas to be adopted in the energy sector, which could account for up to 50 % of the power mix, is another initiative being taken in the nation. Recognising the price differential for innovative solutions, Singapore is seeking “Pathfinder projects”. As a part of this action, Singapore aims to work with the business to experiment with and build up abilities in superior gas technologies, and identify and address any professional, protection, or regulatory issues that may arise.

Chen said that the private sector and financial institutions are closely involved in this phased approach. Currently, the focus is on shortlisting consultants and conducting pre-field studies, with funding secured to support these initiatives. The goal of the approach is to address the cost disparities brought on by new technologies and ensure the project’s viability and bankability.

¬ Haymarket Media Limited. All rights reserved.

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Fefifo collaborates with PayNet to improve incomes, advance digital payments inclusion for farmers in Malaysia

  • Collaboration helps develop Malaysia’s food safety interests
  • Aims to support B40 producers to become online knowledgeable rural entrepreneurs

From left : Chris Fong, co-founder, Fefifo, Shahirah Shafri, senior corporate affairs executive, Fefifo, Riri Yanti Razali, corporate affairs and partnerships lead, Fefifo, Azleena Idris, senior director, Strategy & ESG, PayNet and Kelveen Soh, co-founder, Fefifo)

Fefifo, an AgriTech startup, announced that online applications have been made available for qualified farmers from B40 communities in Malaysia to participate in the Farmer Digitalisation Programme, which uses Fefifo’s Magic Bean app and is based on Payments Network Malaysia ( PayNet ) digital payments.

The agreement between PayNet, the nation’s payments system and provider of key financial infrastructure, was formalized in November 2023. This engagement includes:

  • Fefifo will provide funding to train B40 producers to become technologically savvy rural agropreneurs.
  • Bonuses, education, and project sponsorships from PayNet for farmers in the B40 area who are in Fefifo’s Farmer Digitalisation Program to embrace digital payments
  • PayNet support has been provided to lower the cost of running Fefifo’s digital distribution centers, as well as maintaining a logistics ship that transports plantation create for sale to Fefifo’s network of offtakers.

Fefifo’s Farmer Digitalisation Programme aims to digitalize smallholder farmers so that they can grow high-quality food plants by providing a thorough value chain answer using Fefifo’s custom mobile system” Magic Bean.” These solutions include MyGAP- qualified stage- by- step, on- demand online farming SOPs, agricultural expert support, lower priced key agri- inputs, guaranteed 100 % offtake, and access to financing facilities. &nbsp,

It aims to promote sustainable livelihoods for smallholder farmers by growing high-quality harvests more frequently for a prompt harvest.

Leveraging Fefifo’s expertise in food crops know- how, specialized online farming platforms, complimented by PayNet’s wide network of ecosystem participants and range of digital payment products and services, this simultaneous collaboration helps to improve the nationwide food security priorities, increase local food production, and reduce reliance on imported food, in support of National Agrofood Policy 2021- 2030.

Kelveen Soh, co-founder of Fefifo, stated that this sponsorship supports farmers as a kick-starter financial support by subsidizing the cost of the initial seeds and nutrients needed at the beginning of a crop growing cycle. On top of all the other advantages and benefits that come with being a part of our fast-growing network of farms and farmers, he added,” Small farmers in our network appreciate this help to start a new cycle of growing.”

Muhamad Hafizam Rasidi, a second-generation settler from FELDA, is one of the earliest beneficiaries. He has been receiving three months of on-the-job training at Fefifo Co-farm in Perak since December 2023, and is now back in his village in Pahang onboarding other interested farmers. &nbsp,

On my family farm, I used to grow lemongrass. Income was uncertain, due to price and harvest. I’ve heard that if grown properly and properly, chilies produce a better harvest and steadyer income. Then Fefifo was introduced to me and I made the decision to try. It has been a good experience, learning hands- on how to grow chili at commercial scale”, he added. &nbsp,

” I look forward to returning to my kampung to encourage others to participate in this program. It’s simple for me to switch to this new way of farming thanks to the modern methods, digital SOPs, and ongoing support in Fefifo’s mobile app Magic Bean. Fefifo takes care of everything, which also means I do n’t have to worry about sales. Everything is fully cashless and received immediately”, Hafizam said.

Up to 100 B40 farmers will receive sponsorships from PayNet to join the program, and several distribution centers will be established nationwide in the next few months to facilitate farmers ‘ access to rural markets through the program so they can send their produce to Fefifo and receive payments digitally. In addition, PayNet has also funneled potential additional cohorts from its other ESG initiatives. They include graduates from the B40 communities who are relocating to their hometowns to launch their own social enterprises, one from a public university in Pahang and the other, one in Johor. Additionally, cohorts from one of the PayNet-supported fintechs are in the pipeline from B40 communities in Sabah.

This program is an extension of the firm’s PayNet Cambah programme, which aims to create virtuous cycles of sustainable, cashless communities, and is the first in AgriTech, according to Azleena Idris, senior director and head of the Strategy &amp, ESG Office at PayNet. It has the potential to truly transform and revolutionize the agricultural sector, enabling creative yet practical application of technology for small farmers to increase their income from more money made from more advanced farming methods, lower production costs, and assured returns. Because everything is cashless and credited directly to their accounts, they no longer have to worry about handling cash or payment delays,” she continued. &nbsp,

In order to advance cashless payments integration and equip these target segments with digital literacy skills, PayNet is also working with public sector bodies, NGOs, start-ups, fintechs, and local entrepreneurs. Working together is essential to unlock the potential of the digital economy for these segments, Azleena said.

The Farmer Digitalisation Programme has so far piqued the interest of participating ecosystem partners and communities in Negeri Sembilan, Pahang, Perak, and Selangor, and is expected to expand to Johor, Penang, Kedah, and Sabah in the near future. discussions with local governments and local communities for large-scale participation, including those with the Penang DOA, the Malaysian Communications &amp, the Multimedia Commission, and other local cooperatives. &nbsp,

To know more about the program details, please visit www. fefifo. co/fdp. Fefifo program advisors will conduct an in-person verification process to evaluate the applicant and the current farm conditions for all online applications.

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Ant International, Capital A form partnership in digital payments, financial technologies, and sustainability promotion

  • Partnership includes Capital A’s businesses: AirAsia, AirAsia Move & BigPay
  • BigPay partners Alipay+, enabling seamless payments for users traveling abroad

Left to Right: Jamaludin Ibrahim, independent non-executive chairman of AirAsia Aviation Group; Tony Fernandes, CEO of Capital A; Eric Jing, chairman and CEO of Ant Group; Yang Peng, CEO of Ant International

Ant International and Capital A Berhad, owner of AirAsia, have formed a strategic collaboration in various areas. This includes exploring to integrate more local payments methods and providing payment orchestration services to Capital A’s platforms, work on digital marketing and sponsorship opportunities to drive business growth, and cooperate to create inclusive and sustainable impact.

In a joint statement, both parties stated that the comprehensive partnership covers collaborative initiatives between Ant International’s Alipay+ cross-border payment, marketing, and digitalisation technology solutions, payment orchestration services, and other business segments, and flagship businesses under Capital A, including AirAsia, the one-stop travel platform AirAsia MOVE, and finance app BigPay.

Tony Fernandes, CEO of Capital A, said, “Ant International’s global recognition as a financial technology powerhouse, coupled with their expertise, is poised to propel rapid growth for our fintech venture BigPay and our online travel app AirAsia Move. Both entities are dedicated to agile expansion, and this partnership promises to accelerate our collective mission of providing seamless financial services and affordable travel experiences to our customers worldwide.”

Meanwhile, Yang Peng, CEO of Ant International, said, “We are excited to join hands with Capital A to start a new chapter of cross-industry digitalisation, building on the strong synergy between us. By leveraging Ant International’s innovative digital technology solutions and Capital A’s robust global ecosystem, we can bring more seamless services and diversified growth pathways for consumers and businesses in the region and beyond.”

Both sides have agreed that AirAsia Move will work with Ant International to integrate Alipay+ e-wallets as payment options within the Move payment flows, and explore the use of various wallet tech including super app related solutions as well as developing mini-program within Alipay+ ecosystem.

In addition, AirAsia Move will work with Ant International and its partners to leverage its user base to promote AirAsia Move’s services. This could involve targeted promotions, exclusive deals for Alipay+ partner wallet users, and cross-platform visibility for AirAsia MOVE’s services within the Alipay+ ecosystem. AirAsia MOVE and Ant International will also work on joint marketing opportunities and sponsorship opportunities for events such as UEFA Euro 2024.

The two sides also agreed that BigPay will become the latest Alipay+ partner wallet, allowing its 1.5 million users to pay seamlessly when they travel abroad. It will also explore using Alipay+ wallet tech, including fraud prevention and other innovative technologies, to develop an even stronger super app.

In the meantime, its airline entity AirAsia will leverage Ant International’s Airline Controller orchestration solution to drive payment efficiency and work with Ant International to enable the acceptance of payment methods for online, offline, and in-flight checkout.

Presently, Capital A offers over 20 different products and services leveraging each other, including the airline group – AirAsia Aviation Group, AirAsia Move, and BigPay fintech services, serving over 700 million people in the region.

Introduced in 2020, Ant Internation claims that its Alipay+ Cross-border Mobile Payment Service connects over 88 million merchants in 57 countries and regions to 1.5 billion consumer accounts on over 25 e-wallets and banking apps, allowing consumers to travel and pay worry-free globally, and merchants to build out cross-border consumer engagement and digital marketing.

The service builds on its regional partnerships, including those with national QR schemes such as Singapore’s SGQR, Malaysia’s PayNet, South Korea’s ZeroPay, Sri Lanka’s LankaPay, and Cambodia’s KHQR.

The firm stated that both parties will also promote sustainability initiatives such as advancing global digital inclusion, cultivating digital talent, and promoting sustainable travel programs, as agreed upon by the two companies.

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Capital Markets Malaysia supports high growth SMEs with enhanced Elevate Programme

  • CMM expands the requirements for an executive management program that is fully sponsored.
  • 10- time programme spanning four weeks culminates in traders ‘ roadshow

Capital Markets Malaysia supports high growth SMEs with enhanced Elevate Programme
High-growth small and medium businesses ( SMEs ) are welcome to Capital Markets Malaysia ( CMM), an affiliate of the Securities Commission Malaysia (SC), through its Elevate Programme, which aims to help businesses successfully fund-raise through the capital market and get ready for the upcoming growth stage.

The program, which was launched with the help of SC and Bursa Malaysia, provides the foundation for businesses to fulfill governance standards and make them for the nuances of funding through the cash market, including potential listing on the Main or ACE Market, which calls for them to be more organized and accessible to potential investors and financial intermediaries.

Additionally, it is intended to teach senior leadership how to cultivate an development mindset, how to develop their company models, and how to formulate a vision of growth.Capital Markets Malaysia supports high growth SMEs with enhanced Elevate Programme

The SC recognizes the importance of SMEs to Malaysia’s economy and the need to close the financing supply-demand gap, according to Awang Adek Hussin ( pic ), the executive chairman of SC and CMM. Businesses looking to grow, increase money, or go public with their Investor plans are served by CMM’s Elevate Programme. Against the landscape of an extremely dynamic international marketplace, our goal is to promote the advancement of Malaysia’s higher- growth SMEs”.

The SC and its members are one of many activities that supports SME access to capital business financing. In order to create a strong network of capital-market set MSMEs and increase access to financing for this crucial area of the economy, the SC signed an MOU with SME Corp in 2023.

Capital Markets Malaysia supports high growth SMEs with enhanced Elevate ProgrammeCMM Board Member, Brahmal Vasudevan ( pic ) said,” The capital market can be uniquely leveraged to grow world- class businesses. Malaysia’s money market offers several options for development- oriented companies seeking funds. The key is to make sure the business is prepared for purchase and to determine the most effective financing strategy for businesses at various stages of growth. The CMM’s goal is to provide the knowledge and network necessary to support high-growth Indonesian businesses and their leaders in order to meet their funding needs and advance.

The executive leadership program is designed for SMEs and mid-tier companies ( MTCs ) with annual revenues greater than US$ 1.07 million ( RM5 million ) and is fully funded by CMM. The program covers essential focus areas including layout- thinking, brand, and advertising techniques as well as Environmental, Social and Governance ( ESG) factors. It helps SME leaders understand the intricacies of pitch and creating an ownership story structurally.

The 10-day, four-month program culminates with an investor fair and possibilities for participating organizations to network with and provide to investors, opportunity funds, and private equity firms. &nbsp,

For MTCs looking to enter the investment industry, the Elevate program was initially introduced in 2020. Since therefore, CMM has expanded the eligibility requirements for the most recent program in order to expand its scope and effectiveness, and it has improved the program’s design to make it more valuable for more SMEs and MTCs so that they can draw a significant amount of value from it.

Past cohort members include well-known names like Malaysian Yoghurt Company Sdn Bhd ( Sunglo ), BonusKad Loyalty Sdn Bhd, and Bersatu Integrated Logistics, among others. ICT Zone Sdn Bhd, which properly entered the LEAP industry in 2020 and aims to change to the ACE market by 2025, is one of the notable accomplishments of companies making significant strides in the Elevate program’s money market push. YX Precious Metals Bhd, SNS Technologies, and Thumbprints UTD Sdn Bhd were just a few of the various program alumni who made the investment industry as a result.

The Elevate program’s second of two groups for the year begins in May, and only 15 qualified Malaysian MTCs and SMEs can participate per group. Programs are accepted through April 8th, 2019. Interested parties are asked to apply around. For more information on the programme, visit https ://www.capitalmarketsmalaysia.com/elevate-programme/

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IWD Deal Analysis: How IIX’s WLB6 Orange bond helps women’s livelihoods in Asia | FinanceAsia

In a growing regional trend, December 2023 saw the sixth issuance of Impact Investment Exchange (IIX)’s Women’s Livelihood Bond (WLB) Series, the $100 million Women’s Livelihood Bond 6 (WLB6).

Altogether the IIX, since 2017, has raised $228 million to support women’s economic empowerment in Asia, with the overall trend in deal size on an upward trend. FinanceAsia discussed the investors, the rationale and the processes involved in order to celebrate International Women’s Day (IWD) 2024 on Friday, March 9 and the drive towards diversity, equity and inclusion (DEI) across the region. 

The closing of WLB6 marked the world’s largest sustainable debt security and was issued in compliance with the Orange Bond Principles and aims to uplift over 880,000 women and girls in the Global South.

Global law firm Clifford Chance advised Australia and New Zealand Banking Group (ANZ) and Standard Chartered Bank pro bono as placement agents.

Proceeds from WLB6 will be used to promote the growth of women-focused businesses and sustainable livelihoods across six sectors: agriculture; water and sanitation; clean energy; affordable housing; SME lending and microfinance across India, Cambodia, Indonesia, Kenya and Vietnam. 100% of the $100 million proceeds designed to advance UN’s Sustainable Development Goals (SDG) 5: gender equality and 25-30% designed to advance SDG 13 — climate action.

Robert Kraybill, chief investment officer, IIX, told FA: “The Women’s Livelihood Bond (WLB) Series is a blended finance instrument that pools capital from public-sector development finance institutions and private-sector investors. The public sector investors provide risk-tolerant “first-loss” capital in the form of subordinated notes, while the private sector investors purchase the senior bonds.”

“The WLB Series targets a range of private sector investors seeking a combination of high impact with low risk and an appropriate return. From the outset, beginning with the WLB1, the bonds have attracted both family offices and institutional investors. Initially, this was skewed towards family offices. As the WLB issuances increased, we saw increased interest from institutional investors, such that over 90% of the WLB6 was placed with institutions,” added Kraybill. 

For WLB6, there were global investors on the deal including from the US, Europe and Asia Pacific (Apac). The WLB6 bonds comply with the EU and UK securitisation regulations, making it easier for European institutional investors to participate. For example, one of the investors was Dutch pension fund APG Asset Management which invested $30 million.

Kraybill said: “Throughout building the loan portfolios for the WLBs – from sourcing and screening to due diligence – we integrate traditional credit criteria with impact criteria. We look to invest in companies meeting our credit and financial criteria while delivering meaningful positive impact.”

“We are proud that we have not experienced any payment defaults or credit losses on any of the WLB loan portfolios, demonstrating the resilience of the high-impact women-focused businesses that we work with, even in the face of challenges posed by the Covid-19 pandemic. The first two bonds in the WLB Series – WLB1 and WLB2 – have matured and been fully retired, meeting all of their obligations to bondholders,” Kraybill added. 

The IIX, which is headquartered in Singapore and has offices in Australia, Bangladesh, Brunei, India, Indonesia, the Philippines, Sri Lanka and Vietnam, also tracks the impact outcomes generated by its investment throughout the life of the bonds and reports on the targets. WLB1 and WLB2 exceeded impact projections, according to IIX.   

Complex deal

Given the number of parties involved and a myriad of regulations and compliance, the deal was not easy to put together. 

Gareth Deiner, partner at Clifford Chance, explained to FA the law firm’s role in the deal: “We’ve been involved for several years on these transactions, and this is not the first woman’s livelihood bond that the IIX team has put together.”

Singapore-based Deiner continued: “Historically, we have acted on the trustee side, but we have been advising the lead managers of the transaction for the last three offerings. It’s approximately a three to four month execution process to make sure we get the documentation agreed and the structure in place. IIX do the underlying due diligence on the borrowers, which is necessary given that the financing is raised from the international capital markets. Together with their counsel, they work on the disclosure in the offering document for the bond transaction.”

“As counsel to the lead managers, we are responsible for the underlying contractual documentation for the notes and the offering, but it’s IIX who retain control over the loan documentation with the notes proceeds end-users, and putting the loan pool together. They’re doing due diligence on the on the underlying borrowers of the deal,” he explained. 

This is backed up by IIX’s due diligence. IIX’s Kraybill explained: “The financial due diligence conducted by our credit team is similar to that of other emerging market lenders. What sets us apart is the upfront impact due diligence and ongoing impact monitoring and reporting conducted by our impact assessment team. Our team screens potential investments against rigorous eligibility criteria to ensure they contribute to positive outcomes for underserved women and gender minorities in the Global South while often empowering women as agents of climate action.”

Navigating US legal rules and dealing with investors from around the world also added to the complexity. 

Deiner said: “Dealing with a wide range of investors, including qualified institutional buyers in the US, we needed to comply with US federal securities law, including limiting the sale of the notes to qualified purchasers under the US Investment Company Act. There were also certain structural considerations raised by the EU and UK securitisation regulation.”

“From a legal perspective, it was an interesting deal because there’s a wide range of highly technical substantive law, which required the input from specialists across the Clifford Chance network. We have the expertise across the globe and do a lot of sustainable financing work,” continued Deiner. 

“Recently we’ve advised on some market-leading and groundbreaking transactions in terms of bringing sustainability finance technology to capital markets transactions,” he added.

However, this deal, in particular, involved social governance goals. 

Deiner explained: “What we like about this particular transaction is that so much of the Environmental Social and Governance (ESG) agenda is about the environmental (E) angle, such as green bonds related to carbon transition and climate action. That encompasses sustainable  development goal 13 of the UN Sustainable Development Goals (SDG).”

“However, you rarely hear about sustainable finance transactions that focus on the S and the G in ESG, which IIX champions. Each of the sustainable development goals (SDG) has its own hue, its own colour. This transaction focusses on SDG 5, which is gender equality, and are referred to as Orange bonds – orange being the hue for SGD 5. In addition, IIX has developed its own framework and principles to really drive that S in the ESG,” he added.

Tracking societal impact

There is still a key issue on how to track the impact of where the money ends up.

IIX’s due diligence process includes interviews with beneficiaries and stakeholders of investees,  using its own digital impact assessment tool to incorporate input from a broad group of female beneficiaries. This verifies impact claims while giving a voice and value to the women it is assisting, according to Kraybill.

He continued: “Our selection process for projects funded through WLB6 closely aligns with the objectives of The Orange Movement. Each of the bonds in the WLB Series adheres to The Orange Bond Principles, which focuses on empowering women, girls, and gender minorities, particularly in climate action and adaptation.”

IIX looks at the potential of each project’s mission, vision, goals, and business structure, to evaluate alignment with the core values of the WLB Series and The Orange Movement. Its impact assessment team conducts due diligence to ensure selected projects meet criteria outlined by The Orange Movement and contribute to promoting gender equity and addressing climate challenges in emerging markets, according to Kraybill.

With the rise of bonds connected to ESG and DEI, the scrutiny from investors is also increasing, especially with the prevalence of greenwashing. 

Clifford Chance’s Deiner said: “The legal landscape for green bonds and sustainability-linked bonds has evolved considerably in recent years, particularly regarding due diligence. When a company issues a green bond under a green bond framework, substantial work is required to ensure the bond’s integrity. This diligence has become a critical factor in investment decisions, as investors need to be confident that the environmental credentials are genuine and not merely an instance of greenwashing.”

“One of the key parts of the Orange bond initiative is achieving transparency in the investment process and decision, and the subsequent reporting, as the proceeds are going to an issuer who is on-lending it again, to, for example, a microfinance lender. It’s a combination of seeking an investment return and a view on the credit profile. The funds have specific objectives regarding capital allocation, and the appeal of the Orange bond aspect aligns with this focus,” Deiner added. 

$10 billion goal

The IIX has an ambitious goal of mobilising $10 billion by 2030 and optimism abounds. 

Kraybill said: “We remain optimistic about reaching our ambitious goal through sustained collaboration and concerted action, empowering women and girls worldwide while fostering inclusive and sustainable development.”

“Partnerships with the Orange Bond Steering Committee organisations, like the Australian government’s Department of Foreign Affairs and Trade (DFAT), the UN Capital Development Fund (UNCDF), Nuveen, and others, are vital in this endeavour. Together, we aim to build a gender-empowered financing system, mobilise new capital, and accelerate progress toward gender equality and women’s empowerment globally,” Kraybill added.

The Orange Movement is also building “Orange Alliances” at regional and national levels to bring together gender lens investors and other stakeholders. IIX is conducting training programs to train and certify Orange Bond verification agents.

“We’re introducing an “Orange Seal” for MSMEs and other organisations, which enhances their gender, DEI, and climate bona fides. We have expanded our transaction tagging functionality to include innovative finance instruments that adhere to the Orange Bond Principles framework. Furthermore, we’re eagerly anticipating the launch of the Orange Loan Facility, alongside numerous other initiatives to further the Orange Movement’s mission,” Kraybill said. 

He said: “We remain optimistic about reaching our ambitious goal through sustained collaboration and concerted action, empowering women and girls worldwide while fostering inclusive and sustainable development.”

The next bond could potentially be much larger than WLB6’s $100 million. 

Clifford Chance’s Deiner is also optimistic: “There’s a flow of transactions that we’re going to see over the next 12 months, and this an area that people are paying more attention to. The transactions have grown considerably over the years. These transactions have involved deals from around $20 million up to the latest offering of $100 million. So, there is clearly increasing demand for these transactions each year.”

Standard Chartered declined to provide a comment for the article.


¬ Haymarket Media Limited. All rights reserved.

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IWD Deal Analysis: IIX’s WLB6 Orange Bond helping women’s livelihoods in Asia | FinanceAsia

In a growing regional trend, December 2023 saw the sixth issuance of Impact Investment Exchange (IIX)’s Women’s Livelihood Bond (WLB) Series, the $100 million Women’s Livelihood Bond 6 (WLB6).

Altogether the IIX, since 2017, has raised $228 million to support women’s economic empowerment in Asia, with the overall trend in deal size on an upward trend. FinanceAsia discussed the investors, the rationale and the processes involved in order to celebrate International Women’s Day (IWD) 2024 on Friday, March 9 and the drive towards diversity, equity and inclusion (DEI) across the region. 

The closing of WLB6 marked the world’s largest sustainable debt security and was issued in compliance with the Orange Bond Principle and aims to uplift over 880,000 women and girls in the Global South.

Global law firm Clifford Chance advised Australia and New Zealand Banking Group (ANZ) and Standard Chartered Bank pro bono as placement agents.

Proceeds from WLB6 will be used to promote the growth of women-focused businesses and sustainable livelihoods across six sectors: agriculture; water and sanitation; clean energy; affordable housing; SME lending and microfinance across India, Cambodia, Indonesia, Kenya and Vietnam. 100% of the $100 million proceeds designed to advance UN’s Sustainable Development Goals (SDG) 5: gender equality and 25-30% designed to advance SDG 13 — climate action.

Robert Kraybill, chief investment officer, IIX, told FA: “The Women’s Livelihood Bond (WLB) Series is a blended finance instrument that pools capital from public-sector development finance institutions and private-sector investors. The public sector investors provide risk-tolerant “first-loss” capital in the form of subordinated notes, while the private sector investors purchase the senior bonds.”

“The WLB Series targets a range of private sector investors seeking a combination of high impact with low risk and an appropriate return. From the outset, beginning with the WLB1, the bonds have attracted both family offices and institutional investors. Initially, this was skewed towards family offices. As the WLB issuances increased, we saw increased interest from institutional investors, such that over 90% of the WLB6 was placed with institutions,” added Kraybill. 

For WLB6, there were global investors on the deal including from the US, Europe and Asia Pacific (Apac). The WLB6 bonds comply with the EU and UK securitisation regulations, making it easier for European institutional investors to participate. For example, one of the investors was Dutch pension fund APG Asset Management which invested $30 million.

Kraybill said: “Throughout building the loan portfolios for the WLBs – from sourcing and screening to due diligence – we integrate traditional credit criteria with impact criteria. We look to invest in companies meeting our credit and financial criteria while delivering meaningful positive impact.”

“We are proud that we have not experienced any payment defaults or credit losses on any of the WLB loan portfolios, demonstrating the resilience of the high-impact women-focused businesses that we work with, even in the face of challenges posed by the Covid-19 pandemic. The first two bonds in the WLB Series – WLB1 and WLB2 – have matured and been fully retired, meeting all of their obligations to bondholders,” Kraybill added. 

The IIX, which is headquartered in Singapore and has offices in Australia, Bangladesh, Brunei, India, Indonesia, the Philippines, Sri Lanka and Vietnam, also tracks the impact outcomes generated by its investment throughout the life of the bonds and reports on the targets. WLB1 and WLB2 exceeded impact projections, according to IIX.   

Complex deal

Given the number of parties involved and a myriad of regulations and compliance, the deal was not easy to put together. 

Gareth Deiner, partner at Clifford Chance, explained to FA the law firm’s role in the deal: “We’ve been involved for several years on these transactions, and this is not the first woman’s livelihood bond that the IIX team has put together.”

Singapore-based Deiner continued: “Historically, we have acted on the trustee side, but we have been advising the lead managers of the transaction for the last three offerings. It’s approximately a three to four month execution process to make sure we get the documentation agreed and the structure in place. IIX do the underlying due diligence on the borrowers, which is necessary given that the financing is raised from the international capital markets. Together with their counsel, they work on the disclosure in the offering document for the bond transaction.”

“As counsel to the lead managers, we are responsible for the underlying contractual documentation for the notes and the offering, but it’s IIX who retain control over the loan documentation with the notes proceeds end-users, and putting the loan pool together. They’re doing due diligence on the on the underlying borrowers of the deal,” he explained. 

This is backed up by IIX’s due diligence. IIX’s Kraybill explained: “The financial due diligence conducted by our credit team is similar to that of other emerging market lenders. What sets us apart is the upfront impact due diligence and ongoing impact monitoring and reporting conducted by our impact assessment team. Our team screens potential investments against rigorous eligibility criteria to ensure they contribute to positive outcomes for underserved women and gender minorities in the Global South while often empowering women as agents of climate action.”

Navigating US legal rules and dealing with investors from around the world also added to the complexity. 

Deiner said: “Dealing with a wide range of investors, including qualified institutional buyers in the US, we needed to comply with US federal securities law, including limiting the sale of the notes to qualified purchasers under the US Investment Company Act. There were also certain structural considerations raised by the EU and UK securitisation regulation.”

“From a legal perspective, it was an interesting deal because there’s a wide range of highly technical substantive law, which required the input from specialists across the Clifford Chance network. We have the expertise across the globe and do a lot of sustainable financing work,” continued Deiner. 

“Recently we’ve advised on some market-leading and groundbreaking transactions in terms of bringing sustainability finance technology to capital markets transactions,” he added.

However, this deal, in particular involved social governance goals. 

Deiner explained: “What we like about this particular transaction is that so much of the Environmental Social and Governance (ESG) agenda is about the environmental (E) angle, such as green bonds related to carbon transition and climate action. That encompasses sustainable  development goal 13 of the UN Sustainable Development Goals (SDG).”

“However, you rarely hear about sustainable finance transactions that focus on the S and the G in ESG, which IIX champions. Each of the sustainable development goals (SDG) has its own hue, its own colour. This transaction focusses on SDG 5, which is gender equality, and are referred to as Orange bonds – orange being the hue for SGD 5. In addition, IIX has developed its own framework and principles to really drive that S in the ESG,” he added.

Tracking societal impact

There is still a key issue on how to track the impact of where the money ends up.

IIX’s due diligence process includes interviews with beneficiaries and stakeholders of investees,  using its own digital impact assessment tool to incorporate input from a broad group of female beneficiaries. This verifies impact claims while giving a voice and value to the women it is assisting, according to Kraybill.

He continued: “Our selection process for projects funded through WLB6 closely aligns with the objectives of The Orange Movement. Each of the bonds in the WLB Series adheres to The Orange Bond Principles, which focuses on empowering women, girls, and gender minorities, particularly in climate action and adaptation.”

IIX looks at the potential of each project’s mission, vision, goals, and business structure, to evaluate alignment with the core values of the WLB Series and The Orange Movement. Its impact assessment team conducts due diligence to ensure selected projects meet criteria outlined by The Orange Movement and contribute to promoting gender equity and addressing climate challenges in emerging markets, according to Kraybill.

With the rise of bonds connected to ESG and DEI, the scrutiny from investors is also increasing, especially with the prevalence of greenwashing. 

Clifford Chance’s Deiner said: “The legal landscape for green bonds and sustainability-linked bonds has evolved considerably in recent years, particularly regarding due diligence. When a company issues a green bond under a green bond framework, substantial work is required to ensure the bond’s integrity. This diligence has become a critical factor in investment decisions, as investors need to be confident that the environmental credentials are genuine and not merely an instance of greenwashing.”

“One of the key parts of the Orange bond initiative is achieving transparency in the investment process and decision, and the subsequent reporting, as the proceeds are going to an issuer who is on-lending it again, to, for example, a microfinance lender. It’s a combination of seeking an investment return and a view on the credit profile. The funds have specific objectives regarding capital allocation, and the appeal of the Orange bond aspect aligns with this focus,” Deiner added. 

$10 billion goal

The IIX has an ambitious goal of mobilising $10 billion by 2030 and optimism abounds. 

Kraybill said: “We remain optimistic about reaching our ambitious goal through sustained collaboration and concerted action, empowering women and girls worldwide while fostering inclusive and sustainable development.”

“Partnerships with the Orange Bond Steering Committee organisations, like the Australian government’s Department of Foreign Affairs and Trade (DFAT), the UN Capital Development Fund (UNCDF), Nuveen, and others, are vital in this endeavour. Together, we aim to build a gender-empowered financing system, mobilise new capital, and accelerate progress toward gender equality and women’s empowerment globally,” Kraybill added.

The Orange Movement is also building “Orange Alliances” at regional and national levels to bring together gender lens investors and other stakeholders. IIX is conducting training programs to train and certify Orange Bond verification agents.

“We’re introducing an “Orange Seal” for MSMEs and other organisations, which enhances their gender, DEI, and climate bona fides. We have expanded our transaction tagging functionality to include innovative finance instruments that adhere to the Orange Bond Principles framework. Furthermore, we’re eagerly anticipating the launch of the Orange Loan Facility, alongside numerous other initiatives to further the Orange Movement’s mission,” Kraybill said. 

He said: “We remain optimistic about reaching our ambitious goal through sustained collaboration and concerted action, empowering women and girls worldwide while fostering inclusive and sustainable development.”

The next bond could potentially be much larger than WLB6’s $100 million. 

Clifford Chance’s Deiner is also optimistic: “There’s a flow of transactions that we’re going to see over the next 12 months, and this an area that people are paying more attention to. The transactions have grown considerably over the years. These transactions have involved deals from around $20 million up to the latest offering of $100 million. So, there is clearly increasing demand for these transactions each year.”

Standard Chartered declined to provide a comment for the article.


¬ Haymarket Media Limited. All rights reserved.

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PayNet launches accelerator to push financial inclusion, transformation in Malaysia’s FSI

  • Aims to reach 1 million transactions over the next three years
  • Programme to create pilot opportunities with banks, e-wallets & FSIs

PayNet launches accelerator to push financial inclusion, transformation in Malaysia's FSI

NEXEA has announced its collaboration with Payments Network Malaysia (PayNet), the backbone of Malaysia’s digital payment infrastructure to introduce the PayNet Accelerator Programme, an initiative to propel startups in reshaping the nation’s startup ecosystem. 

In a statement, the venture capital and startup accelerator firm stated that the programme is designed to pave the way for potential pilot opportunities with prominent banks, e-wallets, and other financial institutions. The overarching goal of the programme is to champion financial inclusion and propel the digital transformation of Malaysia’s financial industry.

With a goal of reaching 1 million transactions over the next three years, the programme focuses on attaining a 15% share from sub-urban areas. This targeted approach aims not only to achieve the overall transaction milestone, but also to address the specific objective of bridging the gap and create a more inclusive financial landscape for all.

According to Nexea, this collaboration utilises its startup ecosystem experience and network to find and match entrepreneurs with PayNet and corporate partners for new markets, partnerships, joint ventures, investments, and acquisitions. Joining the programme provides startups with up to US$418,000 (RM2 million) worth of benefits. 

The top startups will earn up to US$29,000 (RM100,000) in a shared subsidy pool provided by PayNet as transaction fee rebate, and gain access to Nexea’s Entrepreneurs Programme for 12 months. In addition, the qualified startups will have the opportunities to collaborate directly with PayNet, providing them with access to 22 million bank and e-wallet users, as well as a green lane to any eligible startup accelerator by Nexea.

Gary Yeoh, chief commercial officer of PayNet emphasised that the company is at the forefront of driving innovation and growth within the financial sector, and its partnership with Nexea marks a significant leap forward in this journey. 

“This collaboration is more than a milestone; it represents a strategic gateway to unlocking unprecedented opportunities in financial services. By joining forces with Nexea, PayNet reaffirms its commitment to nurturing home-grown fintech startups, accelerating the digital transformation of Malaysia’s financial landscape,” he added 

“Our concerted efforts are particularly focused on enhancing payment solutions in underserved and rural communities, directly contributing to the national agenda of digitalising the financial sector as outlined in the Financial Sector Blueprint 2022–2026. This partnership exemplifies our dedication to creating meaningful connPayNet launches accelerator to push financial inclusion, transformation in Malaysia's FSIections with payment-centric firms that not only align with our strategic vision but also profoundly resonate with our stakeholders’ aspirations,” Yeoh said. 

He added that as the trusted enabler, PayNet is poised to lead the way in shaping a more inclusive, efficient, and innovative financial ecosystem.

The programme follows a five-months timeline with specially tailored workshops by corporate experts to help streamline the startup’s development. These are corporate innovation experts from Nexea who have advised more than 20 large corporations nationally to drive their open innovation initiatives. 

Payment-related startups that focus on facilitating payments in rural areas, ESG (International standard) and financial literacy are highly recommended to sign up. The selected startups will undergo a series of interviews, corporate innovation workshops, startup corporate matching, demo day and networking events with PayNet and other corporate partners.

Ben Lim (pic), founder & CEO, Nexea stated that strategic alliances with startups drive successful corporate evolution. 

“Recognising innovation as the key to sustained growth, top corporates actively collaborate to bring in fresh perspectives, leverage cutting-edge technologies, and adopt novel business models. This not only unlocks new revenue streams for corporates but also drives true long-term sustainability, especially for those in sunset industries,” he added. 

 Learn more about the programme here.

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Capital A improves its ESG ratings following revamp in strategy

  • Delivered the 11th lowest CO2 emissions per passenger among 80 global peers
  • Capital A & Asia Aviation will start publishing standalone sustainability report in 2023 cycle

Capital A improves its ESG ratings following revamp in strategy

Capital A was recently awarded a GOLD Environmental Sustainability rating from the Centre for Aviation in its 2023 CAPA-Envest Global Airline Sustainability Benchmarking Report for its Air Asia operations.  Capital A attributes this award to a revamp of its sustainability approach to prioritise group wide measures to address climate risks and improve stakeholder communication.

The London Stock Exchange Group also ranked Capital A 15th out of 124 airlines using its ESG scoring that measures a company’s relative ESG performance, commitment and effectiveness across 10 main themes. AirAsia’s score of 71% places it highest among Asean-based carriers.

“In 2020, we began reorienting Capital A’s sustainability focus for a better balance between our external and internal sustainability practice. While we were very active in external social activities prior to 2020, the global pandemic necessitated a recalibration. This coincided with a period when climate change regulations on aviation were also beginning to take shape,” said Capital A chief sustainability officer, Yap Mun Ching.

In Malaysia, Capital A’s ESG score rose to 3.2 from 2.9 out of a possible 5 between 2020 and 2022, surpassing the 2.9 threshold of the FTSE4Good Bursa Malaysia Index in all years of assessment. Capital A’s Thai associate Asia Aviation also saw its ratings rise to 81% from 67% between the 2021 and 2022 assessment cycles, ranking it among AA-rated companies of the Stock Exchange of Thailand’s ESG Ratings.

Capital A has also been focusing on its diversity metrics, with women making up 53.8% of all employees and 32% of all senior managers. AirAsia also maintained its lead as the airline employing the highest number of women pilots in Southeast Asia at 6.6%, above the global average of 5.8%. 

“In 2020, we began reorienting Capital A’s sustainability focus for a better balance between our external and internal sustainability practice. While we were very active in external social activities prior to 2020, the global pandemic necessitated a recalibration. This coincided with a period when climate change regulations on aviation were also beginning to take shape,” added Yap.

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CloudMile opens first of its kind cloud CoE in Malaysia

Offers participants access to digital learning paths at no cost
CoE set to benefit 300k Malaysians by 2026 via upskilling programme

CloudMile has announced the opening of its CloudMile Centre of Excellence (CoE) in Malaysia, serving customers across Southeast Asia (SEA). The firm claims that the CoE, is a first-of-its-kind initiative in the cloud industry,…Continue Reading

CelcomDigi records strong financial performance and solid first year of integration

Integration & synergy targets met, network modernisation efforts ahead of schedule 
Service revenue rose 0.4% Y-Y, with 4Q FY2023 revenue up 0.9% across core segments

CelcomDigi Bhd (CelcomDigi) has announced its fourth quarter and full year results for the financial year 2023 marking a solid first year of operations as a merged company. In…Continue Reading