Climate fund closes at US$412 million using blended finance

30th June 2017 Jack Aldane

Climate Investor One, the first climate financing facility launched by fund group Climate Fund Managers, has closed at US$412 million.

The fund uses a blend of public and private financing tools to incentivise institutional investors to create new markets for clean energy projects.

Climate Fund Managers comprises FMO, the Dutch development bank and South African infrastructure fund specialists Phoenix InfraWorks. Established in 2015, the two parties provide expertise in climate investments with risk-adjusted returns for investors seeking positive environmental impact.

Jurgen Rigterink, FMO’s CEO, said the development finance institution’s initiation of the fund brings a blended finance approach to raising capital, which “catalyses institutional investors from a broad spectrum seeking commercial, social and environmental returns into clean energy in emerging markets”.

Through the fund, capital will be deployed at a single source for each phrase of a given project. Construction of a project will receive equity financing at an early stage, followed by long-term debt once the project is fully operational.

According to a statement released by the fund, this approach streamlines projects to market, quickening their social and environmental impact.

Andrew Johnstone, founder and CEO of Phoenix InfraWorks, said the fund “represents a new way of doing business” by giving both public and private sector actors more flexibility to collaborate.

“[The fund] really is a new generation of financing and thinking, both of which are necessary ingredients for progress and climate change management,” Johnstone added.

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