September 13, 2024

By Gerelyn Terzo, Global AgInvesting Media

Toronto-based not-for-profit Convergence, a global network for blended finance, has awarded Vietnam-based Mekong Capital a proof-of-concept grant for an impact initiative. The proceeds are being directed to the private equity firm’s Mekong Earth Regeneration Fund (MERF), a $200 million impact project supporting growth-stage funding for regenerative ag and sustainable forestry in the lower Mekong region of Southeast Asia. Convergence delivered the capital through its Asia Climate Solutions (ACS) Design Grant.

The Greater Mekong Subregion represents a natural economic area cradling the Mekong River and spanning 2.6 million square kilometers (642,473,992 acres) with a combined population of approximately 326 million people. The Lower Mekong region’s population is especially vulnerable to the effects of climate change due to pervasive poverty, limited access to agricultural technology and a heavy dependence on rural farming. Meanwhile, evolving agricultural land use over the years, coupled with a lack of private investment, have exacerbated the issue leaving the Mekong Delta behind in the adoption of sustainable ag practices.

Convergence chose Mekong Capital for the grant to harness the private equity firm’s local experience in bridging the equity funding gap in the region as well as its expertise in the agri-business sector. Mekong Capital’s MERF project will provide boots on the ground support to entrepreneurs through a technical assistance facility that will offer programs to help strengthen the operational capacity of businesses while scaling up their impact, thereby attracting more capital to the companies in the future, Mekong Capital told GAI News.

The MERF initiative was formed with a view to build a biodiverse ecosystem in the Lower Mekong region with a heightened focus on Cambodia, Laos and Vietnam by supporting sustainable land use, nature-based solutions and regenerative farming practices. In addition to delivering climate mitigation benefits, the project seeks to improve the livelihoods of at least 1 million beneficiaries while also strengthening climate adaptation, farmer resilience and biodiversity in the region.

According to a LinkedIn post, Convergence’s ACS grant “targets critical climate mitigation and adaptation sectors in Asia including NbS, clean energy transition, and sustainable cities and infrastructure.” It is funded by four anchor donors, including The Australian Department of Foreign Affairs and Trade, the Monetary Authority of Singapore (MAS), The Olayan Group and the UBS Optimus Foundation. Among the grant’s original cohort of recipients in 2023 was Fairventures Social Forestry’s sister entity NBSV Worldwide for regenerative agroforestry projects in Indonesia.

For its part, Mekong Capital says the proof-of-concept grant from Convergence’s ACS grant will help the project to reach the final design phase and formulate the key technical assistance facility.

Mekong Capital Principal Ellen Van stated, “Mekong Capital and Convergence’s partnership will accelerate the mobilization of much-needed capital for climate adaptation and mitigation while supporting farmers in the Lower Mekong region. Mekong Capital aims to lead the way in private-sector investment and engagement in regenerative agriculture. By leveraging blended capital to help private companies scale regenerative practices that replenish our natural assets and improve the lives of our farmers, MERF seeks to demonstrate that sustainable financial return and impact can co-exist.”

Convergence Senior Director of Market Acceleration and Design Innovation Leah Pedersen said, “Mekong Capital’s Mekong Earth Regeneration Fund was selected due to its high potential for development impact, replicability in other sectors and geographies, and the team’s strong track record of engagement and regional presence. MERF is also a prime example of the field-building power of our funding. Through our grant, Mekong Capital, a mainstream private equity fund manager, will strive to enter the climate finance space for the first time.”

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