[Column] CTF: Redefining the Paradigm of Climate-Tech Investment

A Next-Generation Climate Finance Model Built on Public–Private Collaboration

Capital deployment for climate action has entered a stage of maturity. While countless funds highlight ESG and impact investing, few combine structural innovation with executional strength as effectively as the Climate Technopreneurship Fund (CTF). Managed by NH Absolute Return Partners (NH ARP), the Singapore-based subsidiary of NH Investment & Securities, CTF is a US $200 million fund endorsed by the Green Climate Fund (GCF). It goes beyond traditional capital mobilization, representing an ambitious attempt to redefine the philosophy of climate finance.
 

[Kijung Kwon (Managing Director, NH Absolute Return Partners Pte. Ltd.) and Jong-Hyun Lee (Advisor, Climate Technopreneurship Fund; Advisor, DLG Law Corporation)]

Upgrading Blended Finance: Smart Blending
At the core of CTF lies a precisely engineered structure that combines public first-loss capital with private investment. The Green Climate Fund (GCF) contributes US $83.75 million, representing about 42% of the total fund, as a first-loss tranche to protect downside risks for private investors. This structure goes beyond a conventional subsidy — it is designed so that GCF also participates in returns linked to fund performance, aligning public and private interests with exceptional precision. Given the historical loss rates in climate-tech investing and the risk premiums in emerging Asian markets, this level of protection represents a strategic design that maximizes both private-sector participation and capital efficiency.
 
Practicality of a Multi-Strategy Approach: Bridging the Scale-Up Funding Gap
CTF adopts a multi-strategy model, combining debt, mezzanine, and equity investments to bridge the funding gap that typically arises after the grant phase but before project financing. Debt investments provide stable cash flow and anchor the fund’s base returns, equity captures long-term upside potential, and mezzanine financing seamlessly links the two, optimizing the portfolio’s risk–return profile. This finely balanced structure enables the fund to deliver risk-adjusted returns demanded by institutional investors while sustaining the growth trajectory of innovative climate-tech enterprises.
 

Precision in Impact Measurement: Setting a New Benchmark
CTF sets clear, quantifiable goals of reducing 1.64 million tons of CO₂ annually and reaching 2.3 million beneficiaries. Each investment’s projected impact is calculated through a bottom-up approach, following internationally recognized methodologies such as those of UNFCCC, CDM, and IFC, and is independently verified to ensure credibility. By incorporating the realities of climate-vulnerable communities and balancing fairness with effectiveness, CTF enhances the rigor and integrity of its impact governance framework, establishing a new benchmark for climate finance accountability.
 
Regional Expansion Strategy: Integrated Localization Model
One of the key reasons global funds often underperform in Asia is the lack of local understanding and mismatched partnerships. CTF addresses these challenges by combining NH Group’s network of 37 offices across 14 countries with GGGI’s channels in over 50 member states. This integration establishes a collaborative framework that goes beyond simple deal sourcing to encompass technical due diligence, policy coordination, and post-investment monitoring. From early pipeline formation to execution and exit, the fund’s localization strategy is systematically embedded throughout the entire investment process.
 
7 Investment Themes: Reflecting Regional Specificities
CTF’s investment themes encompass renewable energy, energy storage, low-emission transportation, energy efficiency, agricultural technology, water resource management, and waste management. These priorities directly address Asia’s structural challenges such as agricultural dependence, water scarcity, and the surge in waste generation driven by urbanization. While some of these areas attract relatively less market attention, they play a strategic role in raising the threshold for systemic transformation across the region.
 
Case Study: Localization as a Strategy for Climate Solutions
One of NH ARP’s representative investment cases is a portfolio company “A” that develops, owns, and operates renewable power generation assets centered on solar and wind energy. Unlike Korea’s centralized electricity supply system dominated by KEPCO, many Southeast Asian countries operate decentralized markets where private companies generate power through their own facilities and sell directly to consumers via power purchase agreements. Within this structure, the company commercially operates a cumulative 1 GW of wind and solar power capacity, achieving approximately 1.5 million tons of annual CO₂ reduction while maintaining stable profitability and sustained financial growth. This case illustrates NH ARP’s approach as an investment manager that goes beyond financial execution, deeply understanding the institutional, technological, and economic structures of local markets and translating that insight into effective, locally grounded investment strategies.
 
Implications for the Korean Financial Industry
The success of CTF offers meaningful lessons for Korea’s financial sector. Above all, ESG and climate investment have shifted from being optional initiatives to essential elements of competitive advantage. In an era where traditional financial returns alone can no longer define sustainability, incorporating climate risks and impact metrics as core variables in portfolio management has become the new standard.
 
Moreover, the Asian market provides Korean financial institutions with a distinct comparative edge. Compared to their Western counterparts, they possess a deeper understanding of Asia’s industrial structures, policy environments, and social contexts. Leveraging these regional strengths to build local partnerships and operational capabilities can unlock new avenues for growth.
 
Finally, future differentiation will depend on the ability to move beyond capital intermediation — to coordinate diverse stakeholder interests, blend public and private capital, and design sustainable financial architectures. The capacity to structure complex relationships and manage both capital and impact simultaneously will define the next frontier of competitiveness for Korea’s financial industry.
 
Future Challenges: Talent, Exit, and Policy
For CTF to sustain its success, several key priorities must be addressed. First, there is an urgent need to nurture interdisciplinary talent that bridges climate technology and finance. Such professionals must go beyond conventional investment analysis to assess both the economic and environmental implications of technologies and engage effectively with global partners.
 
Second, diversification of exit strategies is essential. Since IPO markets in many Asian countries remain underdeveloped, alternative exit routes such as mergers and acquisitions (M&A) or strategic investor buyouts should be pursued in parallel. This approach will enhance capital recycling efficiency and foster a sustainable reinvestment cycle.
 
Finally, stronger policy alignment is critical. Shifts in national climate policies and regulatory frameworks directly affect investment returns; thus, sustained dialogue with policymakers and joint program initiatives are vital to ensure institutional stability. The ability to coordinate between public policy and private capital will determine the long-term sustainability of climate finance.
 
Conclusion: Challenging the New Standard
CTF represents more than a single fund; it is a pioneering attempt to redefine the standard for climate finance. Regardless of whether its quantified goals of 1.64 million tons of CO₂ reduction and impacting 2.3 million beneficiaries are fully achieved, its blended structure, multi-strategy approach, and rigorous impact management already mark a significant milestone. As this model expands beyond Asia to the global stage, Korea’s leadership at this turning point will be particularly meaningful. The climate crisis is both the greatest challenge and the greatest opportunity, and CTF stands as a leading example of how that opportunity can be turned into tangible impact.
  

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