Friday
February 28
2020

Press Release: Convergence Grantees Mobilize $550 Million Towards Blended Finance for Global Development

Four years since Convergence launched its Design Funding program, it has awarded $6 million in funding to 18 blended finance solutions, which have gone on to mobilize over $550 million from public, philanthropic, and private investors towards the Sustainable Development Goals (SDGs).

The Design Funding program awards grants to design blended finance solutions that attract private capital to global development at scale.

“The half billion dollars mobilized by Convergence grantees is a feat on its own, but this money will go on to generate real development impact over many years, whether it’s supporting conservation in island nations or improving access to finance for low-income women,” says Joan Larrea, CEO of Convergence. “That’s what’s so compelling about Design Funding. It shows us how early-stage funding injected at just the right time to support a blended deal can lead to a cascade of impacts, including building the blended finance market, catalyzing additional investment, and improving the lives of people.”

Grants have been awarded to vehicles in a diverse range of sectors and regions, from an impact bond for maternal and newborn health in India to a financing structure for electric transit in Latin America.

Convergence supported Aligned Climate Capital to coordinate and design the Climate Finance Partnership (CFP), an unprecedented blended finance partnership between the world’s largest asset manager – BlackRock – and leading philanthropies and governments. At Davos this year, the CFP announced that it has raised over $75 million in concessional capital that will mobilize climate-related investments in emerging markets.

“The CFP is a new model of philanthropies and governments working together to mobilize institutional capital at scale. Tackling climate change demands creative partnerships like the CFP that aim to significantly expedite the flows of private capital into climate opportunities. And Convergence support was critical to CFP’s design phase,” says John Morton, Managing Coordinator of the CFP and Senior Advisor to Aligned Climate Capital.

Convergence also supported the design of Clarmondial’s Food Securities Fund, an open-ended investment fund for private credit in agriculture, which recently secured a $15 million package from the Global Environment Facility.

“The funding from Convergence was a significant milestone in the development of the Food Securities Fund. It helped us secure commitments from public and private investors for this new investment vehicle to support climate-smart agriculture in emerging markets,” says Tanja Havemann, Co-Founder & Director of Clarmondial.

The type of early-stage funding offered by Convergence’s Design Funding program is instrumental for developing the blended finance market, especially in frontier markets and nascent sectors. Blended finance transactions can be complex, time intensive, and costly to structure and launch. Design funding operates as a market acceleration tool. It provides critical support early on to teams with viable investment products who otherwise lack the resources to get to market. The resulting transactions, and the lessons propagated, contribute to building the market and ultimately catalyzing additional investment towards the SDGs.

The Design Funding program offers two types of grants, feasibility study funding (up to $200,000) or proof of concept funding (up to $500,000 in repayable grants).

Two new partners have stepped forward to support the program, initially funded by the Government of Canada. Convergence’s two windows currently accepting applications are: i) the Indo-Pacific Design Funding Window, initially focused on sustainable and resilient infrastructure and funded by the Australian Government, and ii) the Asia Natural Capital Design Funding Window funded by RS Group.

The Design Funding program is open to additional funding partners. Organizations interested in launching their own window or co-funding an existing window, to catalyze private sector investment towards the SDGs, are encouraged to contact Convergence at: design.funding@convergence.finance.

Photo courtesy of Sudipto Sarkar.

Source: Press Release

Categories
Finance
Tags
blended finance, global development, impact investing, SDGs, Sustainable Development