Blended Finance Breakthrough: Fund Targets Climate Resilience for Southeast Asian Farms

Singapore – November 15, 2025 – A new $250 million blended finance fund, the Mandala Capital SSEA Food Fund, has secured a $36 million anchor investment from the Green Climate Fund (GCF), signaling a significant step towards bolstering climate resilience in the agricultural sectors of South and Southeast Asia. The fund, managed by private equity firm Mandala Capital, will focus on scaling climate adaptation solutions and strengthening food systems, with a particular emphasis on supporting small and medium-sized enterprises (SMEs).

While climate finance continues to fall short of global needs, this partnership demonstrates a promising approach to mobilizing private capital for a sector acutely vulnerable to the impacts of climate change. Agriculture in the region faces increasing threats from extreme weather events, changing precipitation patterns, and rising temperatures – all of which jeopardize food security and the livelihoods of millions of smallholder farmers.

"The financing gap in climate-resilient agriculture is substantial, particularly in Southeast Asia," explains a climate finance analyst. "Traditional funding mechanisms often struggle to reach SMEs and address the long-term challenges of climate adaptation. This blended finance model has the potential to unlock capital that would otherwise remain untapped."

Addressing a Critical Gap

According to the Food and Agriculture Organization (FAO), agriculture contributes 13% of regional GDP and employs over one-third of the population in South and Southeast Asia. However, the sector remains disproportionately vulnerable to climate change. Studies predict crop yields could decline by 10-20% in the coming decades if adaptation measures are not implemented.

Mandala Capital’s fund aims to bridge this gap by investing in profitable, scalable companies that are driving innovation in climate-smart agriculture. This includes companies focused on sustainable farming practices, water management, resilient crop varieties, and climate-risk insurance. The focus on SMEs is particularly important, as these businesses often lack access to the capital and expertise needed to adapt to changing climate conditions.

“Smallholder farmers are on the front lines of climate change,” says a representative from an agricultural NGO. “They are the most vulnerable, but also the most resourceful. Providing them with access to finance and technology is crucial for building resilient food systems.”

The Power of Blended Finance
The GCF’s $36 million anchor investment is designed to de-risk the fund and attract additional private capital. Blended finance combines public and philanthropic funds with private investment, creating a more attractive risk-return profile for investors. This approach allows for a wider range of investments in climate-resilient agriculture, including those with longer payback periods or higher perceived risks.

“Blended finance is not a silver bullet, but it can be a powerful tool for mobilizing capital for climate action,” notes a climate finance expert. “By combining public and private funds, we can leverage resources and scale up investments in sustainable agriculture.”

Beyond Finance: Building Resilience
The Mandala Capital SSEA Food Fund is not solely focused on financial returns. The fund also aims to deliver broader social and environmental benefits, including improving food security, enhancing livelihoods, and reducing greenhouse gas emissions.

“We are committed to investing in companies that are not only profitable but also have a positive impact on the environment and local communities,” says a representative from Mandala Capital. “We believe that sustainable agriculture is essential for building a more resilient and equitable future.”

The fund's investment strategy will prioritize companies that demonstrate a commitment to sustainable farming practices, such as reducing water consumption, minimizing pesticide use, and promoting biodiversity. It will also support companies that are developing innovative technologies for climate-smart agriculture.

Challenges and Opportunities

Despite the promise of blended finance, several challenges remain. These include the complexity of structuring blended finance deals, the need for strong governance and monitoring, and the risk of “additionality” – ensuring that the investment leads to outcomes that would not have occurred otherwise.

“It's important to ensure that blended finance investments are truly additional and not simply replacing existing funding sources,” explains a policy analyst. “We need to carefully evaluate the impact of these investments and ensure that they are delivering meaningful results.”

Despite these challenges, the Mandala Capital SSEA Food Fund represents a significant step forward in mobilizing private capital for climate adaptation in Southeast Asia. By focusing on SMEs and prioritizing sustainable farming practices, the fund has the potential to build more resilient food systems and improve the livelihoods of millions of smallholder farmers. The success of this fund could pave the way for similar initiatives in other regions and sectors, helping to accelerate the transition to a more sustainable and climate-resilient future.

As a climate finance analyst notes, “This fund demonstrates the potential of blended finance to unlock capital for climate action. It’s a promising model that could be replicated in other regions and sectors, helping to build a more sustainable and resilient future.”

The fund is expected to begin making investments in early 2026, targeting SMEs across Southeast Asia. The long-term impact of the fund will be closely monitored by the GCF and Mandala Capital, with a focus on both financial returns and social and environmental benefits.