BlackRock-managed Climate Finance Partnership in $250m first close

Dai-ichi Life, Standard Chartered, MUFG and a fourth LP have committed $137.5m to the blended finance vehicle, targeting emerging markets climate infra.

The Climate Finance Partnership, a blended finance vehicle managed by BlackRock that will invest in climate infrastructure in emerging markets, has reached a first close on $250 million.

BlackRock, which will not be committing capital to the fund, as a spokesman for the firm explained, secured commitments totalling $137.5 million from Dai-ichi Life Insurance, Standard Chartered, MUFG Bank, and “a leading European pension fund”, according to a statement.

The four institutions are the first LPs to commit to the fund, which features a first-loss tranche from government institutions and philanthropies meant to crowd in private investors. That first-loss tranche amounts to $112.5 million, the combined total CFP’s partners have committed to the vehicle. They are the French Development Agency, Germany’s KfW development bank, the Japan Bank for International Cooperation, the Grantham Environmental Trust, the Quadrivium Foundation and the Hewlett Foundation.

CFP has a target of $500 million and a hard-cap of $1 billion, a source familiar with the fundraising told Infrastructure Investor. It will invest in select countries in Asia and Latin America, and at least 25 percent of its capital will be invested in Africa.

From a sectoral perspective, the fund will invest in grid connected and/or distributed renewable power generation; energy efficiency in residential, commercial and/or industrial sectors; transmission or energy storage solutions; and ultra-low emission or electrified transportation and mobility services.

“CFP showcases the potential for the public, philanthropic and private sectors to work together to mobilise significant investment into climate infrastructure that can deliver positive environmental and social impact and allow for attractive risk-adjusted returns,” BlackRock said in the statement. It also noted that roughly $9 trillion is needed for emerging markets to derive two-thirds of their energy from renewable power by 2050.

Considerations of social environmental impact are integrated in the investment management process and impact will be evaluated along specific UN Sustainable Development Goals, according to a document from MUFG Bank, which was committed $20 million to the fund.

The partnership was developed under the auspices of the Task Force on Philanthropic Innovation, launched by French president Emmanuel Macron and announced in September 2018 at the One Planet Summit held in New York.

According to One Planet Summit website: “France and Germany will participate in the fund’s advisory committee in order to help monitor the proper implementation of the investment policy, which, on the most important points from the governments’ point of view, cannot be modified without the agreement of both states.”