British International Investment (BII), the UK’s impact investor and development finance institution, has said it will be an anchor investor for the Allianz Credit Emerging Markets fund (ACE).
The blended finance fund, which was launched yesterday at BII in London (see enclosed picture), brings together a number of public and private institutions.
Development finance institutions, such as BII and multilateral development banks (MDBs), will provide $150m (£111m) of concessionary capital for the junior tranche of the fund.
This will aim to reduce volatility and support the return expectations for private investors that will provide up to a further $850m if the expected final close target of $1bn is reached.
BII will provide $40m of the $150m and will be joined by Global Affairs Canada – the development agency of Canada, the Inter-American Development Bank Invest (IDB Invest), the Swedish International Development Cooperation Agency and Impact Fund Denmark (IFDK).
The announcement marks the first close of the fund, which has so far secured $690m in commitments.
Allianz SE, the German insurance group and asset manager, and GastroSocial Pensionskasse, the Swiss pension fund for the hotel and catering industry, will be the anchor investors for the senior tranche of the fund.
ACE is set to become one of the largest blended finance funds raised to date, signalling a renewed appetite for structures which bring together a range of investors with different return and impact expectations.
“BII’s participation in the ACE fund demonstrates how we are modernising our approach to international development, by working as partners and investors,” said Baroness Chapman, UK minister for International Development and Africa. “We are using UK government support to attract more private investment to create a bigger impact – ensuring every pound we invest generates much more funding for countries in the Global South to tackle the climate emergency.”
This approach, said Baroness Chapman, helps Britain: “boosting growth, bringing in investment and returns for UK taxpayers” and positions the UK as a key hub for helping emerging economies.
BII’s investment in the ACE fund is the third through its £100 mobilisation facility, launched by Keir Starmer, the UK Prime Minister, in 2024.
A significant percentage of the disbursements from the ACE fund are intended to be made in Africa.
The remainder will be split across emerging economies in other regions.
Investments will be made across a range of sectors including renewable power, clean transportation, agriculture and financial services.
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