A new $1.1bn SDG Loan Fund has been created in response to the increasing demand from institutional investors for large scale blended finance solutions in order to catalyse their capital where it is needed the most to advance the United Nations Sustainable Development Goals (SDGs) in Emerging and Frontier markets. The fund, using an innovative “blended finance” model, is managed by Allianz Global Investors, and is a partnership with FMO (Dutch Development Bank) and MacArthur foundation; it has raised $1bn of private sector capital, in particular from LTIIA members Allianz and Skandia. It has already received strong positive support from the finance, development and impact communities.
• Investors in the fund, are providing capital for high impact, SDG-aligned loans to local companies and projects across Latin America, Asia, Africa and Eastern Europe.
• The SDG Loan Fund’s large-scale and multi-sector reach are enabled by a first loss Investment from FMO, coupled with MacArthur’s guarantee. Together, these catalytic investments are unlocking USD 1 billion in private capital for affordable energy, sustainable agriculture infrastructure in emerging and frontier markets.
The highlights of the fund’s key achievements:
- Private sector led (Allianz and AllianzGI) initiative: this is a paradigm shift
- Scale: $1.1bn capital raised and $100m of investments already approved
- Efficiency of capital: for every $1 of FMO capital in the fund, $9 of private capital is committed (vs industry average of 1:1.8)
- Climate + : the fund has not just climate mitigation but also social objectives
This groundbreaking initiative will help accelerating the speed of scaling capital where it is needed the most.