Speaking at the launch of the COP30 Singapore Pavilion on Nov 10, Menon and other finance professionals shed light on how the blended finance initiative has been structured to attract both concessional and commercial capital.
Fast-P’s first key performance indicator (KPI), according to Menon, is creating an equity structure that attracts private investors.
In practice, the government’s US$500 million grant is to be matched by other sources of concessional capital, and the aim is to use this US$1 billion of concessional capital to “catalyse” another US$4 billion of commercial capital.
“Blended finance is not a new idea. It has been around, it has been tried [and] it has been said to work in a very narrow sense. [It] has never been scaled, and sometimes it doesn’t even work,” says Menon, who retired as managing director of the Monetary Authority of Singapore at the start of 2024. “What is different about Fast-P is that the concessional capital — or the catalytic capital that sits at the bottom of the capital stack — is truly catalytic; it has firstloss absorbency.”
The Singapore government’s grant — which Menon bluntly refers to as “taxpayers’ money” — has “equity-like properties” and can absorb any initial losses when investing in decarbonisation solutions. This alleviates some of the concerns of private investors who join later.
Fast-P’s second KPI is the amount of commercial debt that it can “multiply into”, says Menon. “We set a target of four times, which we achieved in the first close of the Green Investment Partnership (GIP).”
The GIP is one of three funds created under Fast-P, each overseen by an appointed asset manager. Pentagreen Capital, the sustainable infrastructure debt financing platform established by HSBC and Temasek in 2022, serves as the fund manager for GIP, which is focused on renewable energy, electric mobility, and waste and water management.
See also: Defining transition finance and financing the transition
In September, GIP achieved its first close with US$510 million of committed capital from private, public and philanthropic institutions. It has since committed US$110 million to three sustainable infrastructure investments in South and Southeast Asia, which are expected to collectively reduce 1 million tonnes of emissions annually.
As Fast-P grows, Menon hopes it can attract — or “crowd in” — even more private capital.
“My challenge would be [that] we need to do better,” he says. “As we get better at this and as we build more confidence that the Fast-P structure works, we should aim for higher multiples, [attracting] more than four, five or six times [the initial amount].”
Fast-P’s third and final KPI is to maximise emissions reduction, adds Menon. “That’s what we are in this for — it’s not just to invest in a climate project and make money, it is to do that and, at the same time, see how much we can reduce emissions by.”
Here, Menon highlights two considerations: additionality and scale. The former ensures that Fast-P funds projects that otherwise would not have taken place — “you achieve real decarbonisation, then your money is worth it” — while the latter makes for “much more efficient” deals by applying blended finance terms “at the project level” — “the [asset managers] don’t have to argue over every single project”.
Three funds
The US$500 million that Singapore has allocated can only be invested in funds. This ensures that they will be scaled up, says Munib Madni, CEO of Fast-P.
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The “one-for-one matching” with concessional capital owners also “really helps”, adds Madni, who was appointed in June. “All your concessional capital providers don’t see you as a third party… We are actually putting our money where our mouth is.”
Aside from the GIP, Clifford Capital manages Fast-P’s Energy Transition Acceleration Finance partnership (ETAF), focused on replacing fossil fuel based energy with renewables; and BlackRock manages the Industrial Transformation Infrastructure Programme (ITP), focused on decarbonising hard-to-abate sectors.
ETAF has been structured into two “investment sleeves”, according to Menon: phasing out coal-fired power plants and replacing existing or planned carbon-based energy sources with renewable energy.
Both sleeves are involved with the “continuum of coal impacting”, says Vidyasagar Pulavarti, CIO of Clifford Capital Asset Management, in a subsequent panel. “It’s just a ‘point-in-time’ view of whether coal is already a part of the energy spectrum or it is going to be a part of the energy spectrum… On one end, it’s essentially avoiding the creation of new coal assets; [the other] is working with [the] industry and replacing captive coal assets.”
Meanwhile, ITP will focus on providing debt financing to private-sector borrowers seeking to decarbonise their businesses, including technology solutions for decarbonisation (like carbon removals) and projects in hard-to-abate sectors (like cement and steel).
According to Menon, ITP is “broadening its coalition of catalytic capital providers and commercial investors”, with Great Eastern expressing interest to join the programme.
Nearing the end of a 90-minute discussion, Menon explains why Singapore has chosen to undertake this endeavour.
“Climate action is collective action; we need to take concerted action [and] we need to work together across countries. The question that the Singapore government had was simply this: ‘If we have to contribute, what is the best way in which we can contribute?’” he says. “There is so much decarbonisation that can take place with the right amount of financing. We decided that, rather than just contribute to a pot of money to be deployed, why don’t we do the hard work of setting up a structure like this to crowd in capital and multiply our efforts?”
Menon acknowledges the question of whether different blended finance structures may overlap and compete with one another.
On the contrary, he says, there are not enough. “We need at least 10 times more; we need much more… We are trying to set an example so that others will also do similar structures, and we can multiply these effects even more.”
Read more about the Financing Asia’s Transition Partnership (Fast-P):
- Pentagreen Capital backs Citicore with US$55 mil loan for solar and battery storage projects in the Philippines (October)
- Fast-P’s Green Investments Partnership achieves first close with US$510 mil from MAS, Temasek, IFC (September)
- S’pore’s blended finance initiative Fast-P to set up office, management team (May)
- Australia approves US$50 mil investment into Singapore’s Fast-P blended finance initiative (December 2024)
- Temasek-backed Pentagreen to manage Fast-P’s Green Investments partnership, seeking to deploy US$1 bil (November 2024)
- BlackRock, MAS spearhead collaboration on blended finance debt initiative (November 2024)
- Clifford Capital and Pentagreen Capital announce US$30 mil green loan collaboration with BECIS (July 2024)
- Singapore announces Asia-focused blended finance initiative Fast-P with US$5 bil target fund size (December 2023)
