By Karin Strohecker and Colleen Goko
UK development finance institution British International Investment (BII) said on Tuesday it will provide $40m for a new $1bn blended finance fund managed by Allianz Global Investors, aimed at boosting climate investments in emerging markets.
The Allianz Credit Emerging Markets (ACE) fund has so far secured $690m in commitments and was launched on Monday in London, the BII and Allianz said in a statement.
Development finance institutions such as BII and multilateral lenders will provide $150m in concessional capital to cover initial losses, while private investors are expected to contribute up to $850m.
If successful in reaching its $1bn target, ACE would be among the largest blended finance vehicles created yet.
Blended finance, which combines public and private capital to tackle development challenges, has attracted renewed interest as governments and development lenders attempt to close the multitrillion-dollar gap in global climate financing.
However, reviews by the Organisation for Economic Co-operation and Development (OECD) and the World Bank have raised concerns about its complexity and dependence on concessional public funds, with actual mobilisation volumes falling short of what is required.
The fund plans to target investments across emerging economies, allocating about 40% of disbursements to Africa, significantly above typical levels for similar funds, the statement says.
Other regions will share the remaining allocation, with sectors including renewable energy, clean transport, agriculture and financial services.
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