Global impact investment manager BlueOrchard Finance has raised $250m (€220m) for the first close of its new climate fund, securing commitments from Aviva Investors and Daido Life Insurance among others.
The BlueOrchard Climate Action Mobilisation Fund is the first blended finance fund – combining public, private and development funds – in emerging markets to issue notes carrying an investment-grade rating from a leading international credit rating agency, the company said in a statement.
Other commitments came from British International Investment, Schroders and FinDev Canada. BlueOrchard is a member of the Schroders Group.
The fund is designed to provide senior loans to financial institutions that channel climate finance to small and medium-sized enterprises, while also lending directly to companies, BlueOrchard said. The strategy aims to combine attractive risk-adjusted returns with measurable climate impact, the company added.
“The successful first close of [the fund] demonstrates what can be achieved when institutional investors, development finance institutions and investment managers work together to design solutions around investors’ needs,” said Michael Wehrle, CEO of BlueOrchard.
“By combining BlueOrchard’s 25-year track record in emerging-markets private credit with an innovative blended finance structure, including direct corporate lending, we have delivered an investment solution that broadens institutional access to climate finance while meeting the investment and regulatory requirements of insurers and other long-term investors.”
Independent non-profit research group Climate Policy Initiative has estimated that global climate finance needs could reach approximately $9trn annually by 2030. Yet available capital remains only a fraction of what is required, BlueOrchard said.
“Innovative structures such as this blended finance product can help broaden access to a greater range of asset classes, enabling matching adjustment insurers to diversify their portfolios while remaining within regulatory parameters and being able to invest into opportunities that can support climate solutions in emerging and developing markets,” said Munawer Shafi, head of structured and private debt at Aviva Investors.
