BlackRock to raise at least $400m for EM-focused climate infra fund

The fund, which could reach $1bn, will feature a $100m first-loss tranche from government institutions. It will invest in low-carbon assets, with at least 25% invested in Africa.

BlackRock has teamed up with the French and German governments to launch an emerging markets-focused climate infrastructure fund targeting at least $500 million at first close.

The blended-finance vehicle will be part of the Climate Finance Partnership, which was formed in September 2018 by BlackRock, the two European governments and the Hewlett Grantham and Grantham Foundations. The vehicle will be formally launched in the third quarter of this year, with further due diligence to be undertaken in the meantime.

At the World Economic Forum in Davos last week, the governments and foundations committed a total of $100 million towards the fund, a tranche which will absorb early losses as part of the bid to attract other investors. BlackRock said in a statement that it will raise at least $400 million from institutional investors in order to reach a $500 million first close.

The $7 trillion asset manager declined to comment on the target of the fund, but a separate statement from Aligned Intermediary, which has supported the coordination and design of the CFP, mentions a $1 billion target size, with $900 million coming from institutional investors.

The CFP has committed to invest at least 25 percent of its capital in Africa, although it will also invest in Latin America and South-East Asia. It plans to invest in sectors including grid-connected and distributed renewable energy, energy efficiency in residential, commercial and industrial sectors, energy storage and ultra-low emission or electrified transportation and mobility services.

John Morton, managing coordinator of the CFP, said in a statement that the model “provides a replicable template for unlocking private capital toward climate-related investments in fast-growing markets around the world”.

In his annual letter to chief executives, BlackRock’s Larry Fink said “we will see changes in capital allocation more quickly than we will see changes in the climate itself”, as he predicted a swift wave of capital re-allocation to help fight climate change. The asset manager recently joined Climate Action 100+, the world’s largest group of investors by assets pressuring companies to act on climate change.