Mobilising private capital at scale in a Blended Finance Fund

2023

Relevant Topic(s) Tags

Blended Finance

Summary

With a total fund size of $1.1billion, the SDG Loan Fund is one of the largest blended finance funds launched in the market to date. Conceived by AllianzGI and Dutch Development Bank FMO, the Fund benefits from multiple layers of risk protection including a $111 million first-loss investment from FMO, which is credit-enhanced with a $25 million unfunded philanthropic guarantee provided by the John D. and Catherine T. MacArthur Foundation (MacArthur Foundation) as part of the Catalytic Capital Consortium (C3) initiative. The SDG Loan Fund capital is invested as participations in FMO-originated senior loans, thereby granting senior investors priority access to FMO’s investment pipeline and an asset warehouse created for the Fund.

Key Takeaways:

Strategic deployment of catalytic capital: Catalytic capital provided by FMO was strategically deployed to use finite resources efficiently to satisfy the risk-return requirements of institutional investors, achieving a mobilisation ratio of 1

Large-scale blended finance vehicle: The Fund underscores the potential of large-scale financial vehicles to address environmental and social impact as set out by the SDGs while fulfilling investor needs.

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Author Organization(s)

Convergence

Relevant Tags

Financing & Deploying Capital

Relevant Sector

Cross-sector

Featured Organization(s)

Allianz Global Investors (Allianz GI)

FMO Investment Manager (FMO IM)

MacArthur Foundation

Allianz SE

Skandia

Type of Featured Organization or Stakeholders

Asset Owners

Asset Managers

MDBs/DFIs

Philanthropies

Relevant Asset Classes & Other Instruments

Debt / Fixed Income

Geography

Global

Original Language

English

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Mobilising private capital at scale in a Blended Finance Fund | Global Capacity Building Coalition