Welcome to the Sustainable Money Mail! We think investing should be about trying to beat the market while providing capital to companies that make the world a better place. From Asian sovereign financing to U.S solar power, here are our top stories from this week.
Hong Kong proves that green bonds are still strong
This week, the government of Hong Kong announced the completion of a $5.75 billion green bond issuance - marking Asia’s largest ever ESG bond auction. The bonds were denominated in ESD, Euro and Renminbi, and the auction was 6x oversubscribed, with demanding for the RMB bonds particularly strong.
Hong Kong has always been on the cutting edge of finance, and it has fully embraced sustainable finance. Its inaugural green bond auction in 2019 raised $1 billion, and since then it has issued approximately $10 billion more. Hong Kong is the first Asian government to issue green bonds in three currencies concurrently.
Financial Secretary Paul Chain commented on the strength of demand for ESG-linked bonds in Asia, saying “despite the recent market volatility” the recent green bond auction has demonstrated “our commitment to promoting green and sustainable finance and providing the market with useful benchmarks.
Janus Henderson: sustainable investing themes for 2023
Hamish Chamberlayne, the head of global sustainable equity at Janus Henderson (a global asset manager with over $400 bn AUM) has set out three drivers for sustainable investing markets this year:
The Green Industrial Revolution
Chamberlayne believes the next economic cycle will be driven by the shift to low carbon, digital and electric infrastructure. “We will see strategically important industries be brought closer to home to create economic resilience and foster sustainability … We anticipate a capital investment boom on the horizon.”Renewable Energy
There’s no doubt that securing a reliable energy supply will continue to be a top priority for both markets and politicians in 2023. “As well as being integral to energy security, renewables are much cheaper than many other power generation technologies,” Chamberlayne explained. “Today they are the cheapest source of energy for two-thirds of the global population making up 75% of global GDP.”Electrifying Transport
Even as Tesla suffers from Musk’s questionable leadership, the broader EV market is staying strong. Chamberlyne believes we are on the “inflection point in the s-curve of electrification,” and that we will see explosive growth of the industry as EV technology improves and is further embraced by the public. “We believe electrification is well and truly in a strong growth stage, with innovation creating better and more efficiency vehicles at cheaper prices.”
HSBC expands green investment team
HSBC Asset Management announced the initiation of an “energy transition infrastructure-focused” investment team to its Asian alternatives unit. HSBC said the new team would take a “major step” towards building its portfolio of sustainable alternative investments.
The team will be formed from a business transfer agreement with Hong Kong’s Green Transition Partners, a specialist asset manager founded in 2021. The team focuses on sustainable mid-market investments including renewable energy and green infrastructure. Raul Rhodes, a Managing Partner at Green Transition Partners, praised the transfer to HSBC. “Our strategy should be appealing to clients of HSBC AM who are also focused on deploying into the low carbon economy. This partnership will help us connect local developers to global investors with similar sustainability goals.
Solar Energy Provider raises $600 million
Silicon Ranch Corporation, a major independent power producer, has announced a $600 mm equity raise to fund capital investment in rural communities across the U.S. The funding includes $375 mm closed last December, and $225 mm expected early this year.
In 2022, Silicon Ranch installed 11 new solar facilities in the U.S and Canada with a combined capacity of nearly 700 MW (enough to power +100,000 homes). The new funding will allow the company to grow its engineering, procurement and construction team.
Silicon Ranch is 45% owned by Shell, as part of the oil supermajor’s attempts to invest in renewable energy solutions.
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All opinions are the author’s own. This is not investment advice. Please consult your financial advisor before making investment decisions.
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