IFM looks offshore for renewable lending opportunities

Australia is losing out to the global market and increasingly to Asia when it comes to renewables lending from one of the country's biggest fund managers, with IFM Investors executive director and co-head of APAC diversified credit Hiran Wanigasekera saying the risk-return trade-off is simply better offshore.

Wanigasekera told Financial Standard IFM's private debt business lends more to renewables and associated infrastructure in North America and Europe than in Australia at the moment.

"This is a very debt perspective, but that is driven by some of the fundamental characteristics of the localised market...we see the risk trade-off as being superior in those markets relative to here, and the way the market functions," Wanigasekera said.

IFM Investors is also looking at more of these investment opportunities in Asia.

"Asia probably drives a much better return outcome for us on a comparative basis. So, it's interesting for us to look at these investments there," he said.

"You get the best of both worlds... you're able to actually have that positive outcome through investing in renewable energy and energy transition, but you're also getting well compensated in terms of return as well.

"The risk-to-return trade-off may be superior in certain markets versus others, and that sort of drives capital, or drives more interest from us in that way."

IFM opened a Singapore office for its credit strategies team just over six months ago, extending the non-bank lending it has done in Australia for nearly 30 years into Asia, with a focus on South and Southeast Asia.

Wanigasekera said early opportunities in the region include digital infrastructure and telecommunications, healthcare, and the energy transition, mainly solar and wind, with some biofuel-driven power generation emerging.

"The process we run in terms of investing is a little bit different in Asia compared to what we do here. There are certain things in a developed market environment that we may tackle at a very late stage through our investment process, that in an [emerging market] environment you've got to actually deal with very early on," Wanigasekera said.

"It's not a change in what we do. It's just the sequencing of when we do things that has had to be changed... paying much more attention to legal risk, jurisdictional risk, enforcement risk as a lender going into [emerging] markets needs to be addressed upfront.

"Whereas in developed markets, there's a broad understanding that there's a set system, it works. We don't need to deal with that as an early step."

Wanigasekera added the biggest roadblock is a lack of understanding of these markets among Australian investors.

"Asia-Pac is a combination of countries that all sort of don't move in concert... you can have very localised situations that may, at a point in time, make a certain country a more difficult investment story. But at the same time, the neighbouring country is on a completely different trend," he said.

"A good example right now is Indonesia, Vietnam and the Philippines... Indonesia, because of some local governance and political issues there, is a slightly more difficult jurisdiction to invest in, while Vietnam has sort of gone through that phase and is now emerging on the other side, and is actually becoming more attractive.

"The Philippines has been moving in a more steady state for an extended period of time and makes investing a slightly easier story."

Wanigasekera will be speaking at the IGCC Summit 2026 on the panel discussing what's driving and blocking Australian investment at scale.

FS Sustainability is a media partner of the IGCC Summit 2026 to be held on the 24-25 November at Ilumina Sydney. To register, click here.