Funds mobilised more capital than any other blended finance vehicle type in 2024, drawing increased participation from the private sector, especially institutional investors, according to a new report.
Although funds represented just 9% of blended finance deals in 2024, a notable drop from previous years, they mobilised $5.1trn (€4.5trn), Convergence, a blended finance network, said in its report about the state of the market last year.
The share of blended finance commitments from institutional investors has increased from 12% in 2022 to 16% in 2024, with the investor class having a strong preference for blended funds, according to the report.
Bolstered by larger deals, the median deal size for funds has increased from $48m in 2022 to $100m in 2023 and $135m in 2024, increasing the participation from institutional investors and “underscoring the importance of mobilising this investor class to achieve scale”, Convergence said.
“Despite the market growing in size and more people than ever talking about the promise of blended finance, it remains plagued by its most intractable issues”
Joan Larrea, Convergence CEO
Its data show that blended finance deal sizes more broadly have increased from $38m (2020-2023) to $65m in 2024, with 123 deals reaching close totalling $18bn in financing.
“What we’ve seen is that despite the market growing in size, and more people than ever talking about the promise of blended finance, it remains plagued by its most intractable issues,” said Joan Larrea, chief executive officer of Convergence.
Ayesha Bery, report author and associate director, added: “Despite positive signals from the blended finance market in 2024, scaling blended finance will require more than select large transactions and moderate market growth.
“A lack of structural standardisation continues to slow the rollout and replication of blended structures, and in many cases, concessional capital mobilises public commercial funding from multilateral development banks and development finance institutions rather than private investment.”
To address this, the organisation is working with blended finance practitioners to identify a suite of blended finance models to be standardised at both the project and portfolio levels, and across the investment timeline.
It is arguing that no new innovations are necessary to deliver financing at scale, only tweaks to existing solutions.
The latest digital edition of IPE’s magazine is now available

No comments yet