Green Climate Fund (GCF) has approved a $50-million investment in Mekong Earth Regeneration Fund (MERF), the inaugural climate-focused fund by Vietnam-based private equity firm Mekong Capital.
Deutsche Bank acts as the accredited entity responsible for oversight, monitoring, and supervision of the vehicle, according to GCF’s approval document.
Mekong Capital started fundraising for MERF in 2023, targeting $200 million in size. The fund had earlier secured grants from Convergence and the Dutch Fund for Climate and Development’s (DFCD) Origination Facility.
Mekong Capital’s first investment in the space, though not through MERF, is HUSK—a biochar and biofertiliser company engaged in regenerative agriculture practices in Southeast Asia.
The vehicle will focus on investments in the lower Mekong region.
“Although both countries’ national climate plans call for low-emission, climate-resilient agriculture and sustainable aquaculture, private investment remains far below what is needed,” GCF said, pointing to the barriers of high upfront costs, long payback times, limited access to knowledge and technology, and insufficient policy support.
The blended finance fund targets to invest in 10-12 agribusinesses and value-chain companies that work directly with smallholder farmers, supporting the transition to lower-emission and climate-resilient practices. These include regenerative farming, agroforestry and sustainable aquaculture, with a focus on improving soil health, reducing chemical inputs and strengthening ecosystem resilience.
Over its 12-year lifespan, MERF is expected to reach around 279,400 people directly and a further 33,262 indirectly, and to deliver about 8.5 million tCO2eq in emission reductions, alongside new jobs, stronger market access, and improved income resilience for farmers, according to GCF.
“Blended finance structures like MERF are critical to unlocking private capital at scale. By combining concessional funding with institutional investment, we can accelerate innovative climate solutions while delivering measurable impact in markets which can be perceived as higher risk,” said Kamran Khan, Deutsche Bank’s Head of Sustainable Finance for APAC and MEA.
Prior to Mekong Capital, GCF has also committed $60 million in Navis Capital Partners’ first decarbonisation fund.
The Malaysian investment firm has launched its $300-million Navis Decarbonisation Fund I, which will invest through hybrid capital instruments into climate adaptation and mitigation in Southeast Asia.
Concession capital plays an increasingly important role in mobilising private financing for climate projects in emerging markets, as it helps derisk for commercial investors to be comfortable with investing in the sector while seeking palatable returns.
For example, the International Finance Corporation (IFC) is planning to make a $10-million anchor commitment in Acumen Climate Action Pakistan Cooperatief, the first climate-focused, agribusiness-oriented, closed-end private equity fund in Pakistan.
Similarly, Singapore-based circular economy investment management firm Circulate Capital has achieved $220 million in the first close of its second climate fund from development finance institutions such as British International Investment (BII), IFC, Proparco, SIFEM and Australian Development Investments, alongside family offices and global corporate LPs.
BII has also launched British Climate Partners, a £1.1-billion ($1.48 billion) vehicle dedicated to mobilising private capital to support the energy transition in Asia’s emerging markets.
