BII could provide substantial investment in new BlueOrchard climate fund
New vehicle targets over $250 million to finance climate projects in emerging markets.
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British International Investment and BlueOrchard Finance, the impact investment manager, have joined forces to launch a fund aimed at mobilising insurance capital to tackle the climate issues in emerging markets.
BlueOrchard is among the winners of a mobilisation initiative launched by BII earlier this year, which invited private investors to develop products aimed at boosting climate finance in emerging markets.
BII set aside at least half of a £100 million mobilisation facility for the programme. Five organisations were shortlisted following a rigorous evaluation by a panel of industry experts.
BII is expected to make a significant anchor investment in the BlueOrchard Climate Action Mobilisation Fund (BOCAMF), which features a capital structure designed to attract insurance investors at scale.
The fund includes junior and senior equity tranches, both anchored by BII, enabling the senior notes to attain an investment-grade rating and provide fixed returns to insurance company investors.
BOCAMF will primarily aim to provide senior loans to banks, microfinance providers and other financial intermediaries that provide climate finance to SMEs in emerging markets.
BlueOrchard is now seeking commitments from insurance companies for the senior notes, as well as from commercial and impact-focused investors for the senior and junior equity tranches. The fund is targeting a final close of more than $250 million
Leslie Maasdorp, the chief executive of BII, said: “The only chance we have of meeting the monumental funding demands of the climate emergency is to mobilise private capital at scale. Today’s announcement demonstrates how British development finance, working in partnership with a leading private institution, can forge a new path in getting capital to where it is needed most.”
Michael Wehrle, CEO of BlueOrchard, commented: “With an almost 25-year track record, BlueOrchard is a pioneer in impact investing across emerging markets. Meeting investors’ needs and enabling them to participate in impactful investments is one of our top priorities. We are pleased to launch this innovative mandate, specifically designed to address the requirements of insurers and other institutional investors internationally. With the award of this exciting mandate, we have a unique opportunity to unlock new sources of private capital for emerging markets through innovative blended finance structures.”
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