50 million USD climate investment fund targets Vietnam

Deutsche Bank said it is supporting the launch of a new private climate investment fund in Southeast Asia, with the backing of the Green Climate Fund (GCF). The fund called Mekong Earth Regeneration Fund (MERF) aims to reduce about 8 million tons of emissions, support more than 300,000 people, and promote the transition to sustainable agriculture and food systems that are more resilient to climate change in the lower Mekong region.

As a GCF-accredited entity, Deutsche Bank has arranged an investment of $50 million for the new fund. This capital is expected to attract more investment at a ratio of 1:3, meaning every 1 USD from GCF will entail about 3 USD in co-financing capital from other investors. GCF’s investment serves as “priming capital”, helping to reduce project risks and facilitate attracting additional capital from the public and private sectors.

Deutsche Bank will oversee the entire program to ensure capital is used in accordance with GCF policies as well as international environmental and social standards. Meanwhile, Mekong Capital – the investment fund behind Pharmacity, F88, Vua Nem – will take on the role of fund management and carry out investment activities.

Deutsche Bank is Germany’s largest private banking and investment group. They have many years of experience in the fields of asset management, securities custody services and international capital mobilization. Meanwhile, GCF is the world’s largest climate fund for developing countries, specializing in mobilizing large-scale capital and promoting transformation programs through a global network of partners.

MERF will invest in agribusinesses and businesses in the agricultural value chain that work directly with small-scale farmers. Through this, the fund will support the transition to low-emission production models and better adapt to climate change. Priority areas include regenerative agriculture, agroforestry and sustainable aquaculture. The fund also aims to improve soil quality, reduce chemical use in agriculture and increase ecosystem resilience.

The bank said the new fund is designed to address the lack of private investment capital for the regenerative agriculture sector in emerging markets such as Vietnam and Laos. Instead of lending, MERF provides equity capital, helping businesses have long-term financial resources to invest without the pressure of having to repay immediately.

Mr. Kamran Khan, Director of Sustainable Finance for Asia-Pacific and Middle East-Africa at Deutsche Bank, said blended finance models like MERF play an important role in mobilizing large-scale private capital. Combining concessional capital with institutional investment will help accelerate the deployment of innovative climate solutions in markets that are considered high risk.