Having originated, structured, and executed deals for over 15 years across this dynamic region, I’ve seen firsthand how dramatically the perception of risk differs from reality. Misperceptions about risk often overshadow the potential for both returns and impact. It’s time for a shift in mindset, and there has never been a better time to invest.
The combination of ambitious national development and net zero targets, technological leapfrogging, and evolving policy frameworks creates an environment where well-structured investments can deliver both meaningful impact and attractive returns. I will demonstrate this further with data, relevant case studies and examples from PIDG supported transactions in the region.
The Disconnect
The numbers tell a compelling story. Emerging markets are expected to contribute about 65% of global economic growth by 2035[1]. With their young demographics and rapid urbanisation, the demand for climate-resilient infrastructure across South and Southeast Asia is significant and growing.
Yet gaps remain between investment trends and goals. In Southeast Asia alone, spending on clean energy represents only about 2% of the global total. Annual average energy investment over the last three years was USD 72 billion, while the market needs are over USD 130 billion.[2]
This disconnect isn’t merely academic—it represents missed opportunities for institutional investors. Most critically, it signifies inadequate progress towards our collective climate goals and sustainable development targets. Contrary to popular belief, such investment opportunities could not only achieve the desired impact for the investors but also be an efficient asset allocation strategy with an adequate risk-reward framework.
Getting out of the Comfort Zone
The traditional approach of focusing solely on established markets with familiar risk profiles is becoming increasingly untenable. Forward-thinking investors are now recognising that looking beyond these comfort zones isn’t just about diversification—it’s about capturing opportunities that others might miss.
Consider Vietnam’s water sector. PIDG worked on the AquaOne project, securing 20-year fixed coupon financing, which fundamentally changed market perceptions of what was possible. This established a template that others have followed, creating a demonstration effect that has rippled through the market.
In fact, the 20-year offering emerged from direct investor feedback – PIDG initially sought only a 12–15-year bond. Some investors specifically wanted to address high-quality credit opportunities that would also meet longer investment duration needs. PIDG responded by collaborating with the borrower and investors to structure a 20-year bond. While the first tranche issued in November 2024 attracted just barely enough interest to achieve financial close, the follow-up tranche in March 2025 received overwhelming subscription offers, including participation from entirely new investors.
PIDG is now fielding direct requests from investors eager to participate in similar transactions. We have essentially transformed market expectations by demonstrating that properly structured financial products can attract significant interest. When credit risk is reasonably mitigated, social and environmental impact is substantial, and returns are commensurate with risk, investors are increasingly willing to engage. This market disruption has created a new standard for infrastructure financing in emerging markets.
Similar patterns have emerged across sectors:
- In renewable energy, early institutional investor participation is accelerating the deployment of climate solutions. In 2018 PIDG pioneered Bangladesh’s first-ever 15-year loan for the country’s first grid-connected solar project – a venture that previously struggled to secure debt financing from local banks. Fast-forward to 2025, and the landscape has dramatically changed: the original project has successfully refinanced PIDG’s support with the help of local banks, and most renewable transactions launched since our involvement have secured long-term financing from both local and foreign debt providers, including Development Finance Institutions (DFIs), Multilateral Development Banks (MDBs), and commercial banks.
- In commercial and industrial solar energy, PIDG is contributing to the uptake of solar-powered technologies along supply chains in Vietnam. In January 2025, EAAIF, PIDG’s debt fund, invested USD 20 million in CME Solar to develop rooftop solar projects for manufacturing companies in the country. This investment is expected to help CME Solar reach over 260MWp of projects, directly supporting Vietnam’s transition away from coal-fired power.
In sustainable agriculture, companies like Arya.ag, India’s leading grain commerce platform, are improving access to capital and revenues for farmers while promoting financial inclusion. In December 2024, PIDG provided two partial guarantees to HSBC India for an INR 2.5 billion (c. USD 30 million) loan facility to Arya.ag to provide post-harvest liquidity to farmers, farmer producing organisations, and small agri-enterprises, with the aim of bringing them under the formal banking channel and helping unlock greater value for their crops.
- PIDG provided a VND 1,000 billion (c. USD 40M) guarantee for a bond in sustainable agriculture and food security sector when it helped a Vietnamese entity, IDI Sao Mai, issue Asia’s first-ever green bond in the aquaculture space. The bond was well-subscribed by local institutional investors and is also the lowest coupon corporate bond ever issued in Vietnam outside of banking sector.
Each of these examples shares a common thread: they began with investors willing to step beyond conventional boundaries, often with partners who could help navigate the terrain. They also show that there are opportunities in the clean investment space that offer a good risk-reward metric, and solutions that are not only replicable (i.e. not one-off) but also create measurable, tangible impact.
The catalytic effect
When institutional investors enter these markets, they create a multiplier effect that extends far beyond their initial capital deployment.
We’ve seen this “halo effect” with Vivriti Capital in India, where PIDG’s early involvement preceded subsequent investment from local and domestic financial institutions including commercial banks, DFIs and MDBs. What began as a single transaction evolved into a broader market signal that mobilised multiples of the original investment.
In March 2025, PIDG helped issue a partially guaranteed bond for Vivriti that was underwritten by one of the largest banks in India. The transaction, and several others that are in pipeline, will help catalyse the vast pool of institutional capital that is predominantly being deployed in government securities or time deposits with banks.
The infrastructure ecosystem
Success in these markets isn’t simply about capital—it’s about bringing together an ecosystem of partners with complementary strengths.
Local partners serve as essential “eyes and ears on the ground,” providing cultural and commercial nuance that can make the difference between success and failure. In markets where Hanoi and Ho Chi Minh City can feel like different commercial worlds, this local insight proves invaluable.
Risk syndication mechanisms, like those we’ve developed with partners such as Credit Guarantee Corporation of Cambodia (CGCC) and the Swiss International Development Cooperation Agency (SIDA), enable larger transactions by distributing exposure across stakeholders. This allows us to do bigger ticket transactions thereby achieving higher impact without breaching single-obligor limits. This also helps in capacity development in local markets. A collaborative approach transforms projects that might be too large for any single entity into viable opportunities for coordinated action.
A call to institutional investors
The infrastructure gap in South and Southeast Asia presents both a responsibility and an opportunity for institutional investors. As traditional development funding becomes increasingly scarce, innovative investment approaches aren’t just helpful—they’re necessary.
For those who move first, the rewards extend beyond returns:
- First movers gain outsized influence on market development and standards
- Early participants can help shape how sectors evolve including helping shape-up policies from the regulatory ecosystem
- Pioneers establish valuable relationships with local stakeholders and developers
I invite institutional investors to consider allocating a portion of capital to well-structured, high investment grade credit, high impact products focused on these markets—not as philanthropy, but as a strategic investment in regions that will drive global growth for decades to come.
The constraint is not lack of opportunities, rather lack of institutional capital – there is a growing mismatch between demand for investment and the capital available from traditional sources. On behalf of PIDG, I extend this invitation to partner with us to drive meaningful change. Together, we can create sustainable infrastructure that expands prosperity to more places, for more people.
[1]Emerging Markets: A Decisive Decade | S&P Global
[2] Southeast Asia – World Energy Investment 2024 – Analysis – IEA
