LONDON, Jan 21 – British International Investment, the UK’s development finance institution, has committed $40 million to anchor a new blended finance fund targeting climate investments across emerging markets, as efforts intensify to close global funding gaps for the energy transition.
The fund, managed by Allianz Global Investors and known as the Allianz Credit Emerging Markets fund, is targeting $1 billion in total commitments. It has already secured $690 million and was formally launched in London this week, according to a joint statement by Allianz and BII.
Under the structure, development finance institutions and multilateral lenders will provide about $150 million in concessional capital designed to absorb initial losses. Private investors are expected to contribute up to $850 million, allowing public capital to crowd in significantly larger volumes of private funding.
If it reaches its target size, the vehicle would rank among the largest blended finance funds ever established, underscoring renewed interest in the model as governments and development lenders search for ways to mobilise capital at scale for climate action.
Blended finance combines public and private capital to reduce risk and make investments in emerging and developing economies more attractive. While the approach has gained momentum in recent years, reviews by the OECD and the World Bank have highlighted challenges related to complexity, reliance on concessional funding, and mobilisation levels that still fall short of global climate finance needs.
The ACE fund plans to deploy capital across a range of emerging economies, with around 40% of investments earmarked for Africa, a significantly higher share than is typical for comparable funds. The remaining allocation will be spread across other regions.
Key investment sectors include renewable energy, clean transportation, agriculture, and financial services, reflecting a focus on projects that support climate mitigation, adaptation, and sustainable economic growth.
