British International Investment commits $50 million to VPBank

British International Investment commits $50 million to VPBank

British International Investment (BII), a UK development finance institution (DFI) and impact investor, on July 29 announced a $50 million loan to VPBank, supporting Vietnam’s green energy transition.

This is part of a $350 million loan facility arranged by Sumitomo Mitsui Banking Corporation (SMBC), with participation from Export Finance Australia (EFA), FinDev Canada, and the Japan International Cooperation Agency (JICA).

The signing ceremony between BII and VPBank in Hanoi on July 29. Photo: BII

BII’s commitment will support VPBank’s sustainable finance strategy, and strengthen the bank’s climate finance capabilities. Through VPBank, the funding will increase access to finance for Vietnamese businesses, including small- and medium-size enterprises (SMEs), to deliver climate-related projects. This will focus on critical sectors such as sustainable agriculture, clean transportation, the circular economy, and renewable energy.

Iain Frew, British Ambassador to Vietnam, said, “Supporting Vietnam’s net zero ambition by 2050 is central to the United Kingdom and Vietnam’s strong partnership, and reflected in the UK's co-leadership of the Just Energy Transition Partnership (JETP) to mobilise finance towards these goals. It is fantastic to see British International Investment (BII), the UK’s development finance institution, playing an important part in Vietnam’s green transition story.”

“Partnering with leading international and Vietnamese banks, this landmark finance facility will help to unlock critical green finance for local businesses in sectors like clean transport and renewable energy. I’m proud to see UK support catalysing private investment to help drive Vietnam’s sustainable growth path,” he added.

Vietnam is one of the world’s most vulnerable countries to climate change and has emerged as one of the fastest-growing per-capita greenhouse gas emitters. Vietnam’s energy sector, which has traditionally relied on fossil fuel, accounts for over half of the county’s total emissions, followed by agriculture, industrial processes, and waste.

To fully facilitate the green transition of these sectors, the World Bank estimated that $368 billion will be required, underscoring the need to mobilise private capital to help Vietnam achieve its climate targets. BII’s commitment aims to address this critical financing gap and catalyse private sector investments into Vietnam’s green economy.

As BII’s first climate-directed debt facility in Vietnam, it will support national efforts to achieve net-zero emissions by 2050 and highlights the UK’s leading role in supporting Vietnam’s energy transition.

Srini Nagarajan, managing director and head of Asia at BII, said, “Vietnam is a priority market for BII as we continue to deliver climate finance to countries in Southeast Asia that rely predominantly on fossil fuels for energy generation. We are delighted to partner with VPBank, SMBC, and other lenders on this landmark syndicated facility, our first direct debt investment in Vietnam. Our support will focus on promoting climate-responsible businesses and accelerating Vietnam’s green energy transition, which are crucial for achieving its net-zero 2050 goals and ensuring long-term sustainable growth.”

“This successful funding from leading development finance institutions and bilateral agencies reaffirms VPBank’s financial strength, long-term strategic vision and strong international reputation in sustainable finance. The facility will allow the bank to expand its green and social lending portfolios while demonstrating a strong commitment to inclusive growth. It also supports Vietnamese enterprises in their global expansion and helps improve the quality of life through essential infrastructure development,” said Nguyen Duc Vinh, CEO of VPBank.

Marking a significant milestone in BII’s Southeast Asia strategy, the facility is part of the DFI’s ambition to invest up to £500 million ($668.11 million) of climate finance across the region and allocate 30 per cent of total new commitments to climate finance between 2022 and 2026.

Earlier this year, BII established a new utility-scale renewable energy platform, Sustainable Asia Renewable Assets (SARA), working with partners to build a 500 MW portfolio of greenfield renewable energy projects across Southeast Asia, including Vietnam. Other BII-backed investments, including Skye Renewables and BECIS, are also significantly expanding their presence and teams in Vietnam, enabled by BII’s funding.

VIR