British International Investment Leads $1bn Funding For Emerging Markets’ Climate Investments

British International Investment (BII) said, it will be an anchor investor for the Allianz Credit Emerging Markets (ACE) fund, a $1 billion blended finance fund aimed at mobilizing private capital for climate investments in emerging markets.

The blended finance fund, launched in London, brings together a range of public and private institutions. Development finance institutions, such as BII and MDBs, will provide $150 million of concessionary capital for the junior tranche of the fund.

This will significantly reduce volatility and support the return expectations for private investors that will provide up to a further $850 million if the expected final close target of $1 billion is reached.

BII will provide $40 million of the $150 million and will be joined by Global Affairs Canada, the development agency of Canada, the Inter-American Development Bank Invest (IDB Invest), the Swedish International Development Cooperation Agency and Impact Fund Denmark (IFDK).

UK Minister for International Development and Africa, Baroness Chapman said, “BII’s participation in the ACE fund demonstrates how we are modernising our approach to international development, by working as partners and investors.

“We are using UK government support to attract more private investment to create a bigger impact, ensuring every pound we invest generates much more funding for countries in the Global South to tackle the climate emergency. This approach helps Britain too, boosting growth, bringing in investment and returns for UK taxpayers and positions us as a key hub for helping emerging economies.”

The chief executive of BII, Leslie Maasdorp said, “At BII we recognise that we must use our scarce concessionary capital to unlock the vast pools of private finance that is required to meet the global challenge of the climate emergency and drive sustainable, impact-led growth in some of the least developed countries in the world.

Today’s announcement is another milestone for BII in achieving that key objective.”

The head of Private Markets, AllianzGI, Edouard Jozan said, “Addressing climate change cannot be focused solely on investing in developed markets, launching ACE is a bold step forward in mobilising institutional capital to address global development priorities including climate.

“This strategy is a great example of the strength and power of collaboration between the public and private sector and the significant potential for further scale in this asset class. Leveraging our longstanding partnerships with DFIs and MDBs, we aim to deliver investors with both attractive returns and measurable positive outcomes.”

About 40 per cent of the disbursements from the ACE fund are intended to be made in Africa, a figure that is notably higher than other blended finance funds of this type.

The remainder will be split across emerging economies in other regions. Investments will be made across a range of sectors including renewable power, clean transportation, agriculture and financial services.