British Institution to Provide $1bn Investment in Fund to Raise Climate Finance

The British International Investment (BII), the impact investor and development finance institution in the United Kingdom has said that it will be an anchor investor in the Allianz Credit Emerging Markets fund. 

According to reports, the $1bn fund will be focused on accelerating climate finance in emerging markets. Details show that about 40% of the disbursements from the fund are intended to be made in Africa, with the remainder to 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.

The blended finance fund brings together a number of public and private institutions. Development finance institutions 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. 

The BIO will provide $40 million and will be joined by Global Affairs Canada, the Inter-American Development Bank Invest, the Swedish International Development Cooperation Agency, and Impact Fund Denmark.

AEP reports that this recent decision of the BII signals the first close of the fund, which has so far secured $690 million in commitments. Allianz SE and GastroSocial Pensionskasse will be the anchor investors for the senior tranche of the fund. 

The chief executive officer of the institution, 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,” he noted.