British International Investment (BII) and Boston Consulting Group (BCG) have launched a new toolkit aimed at simplifying blended finance structures to attract private investment in climate and development projects in emerging markets.
Key Features of the Toolkit
- Fund Typology: Classifies over 90% of existing blended finance funds into five archetypes based on fund purpose, investor risk appetite, and underlying asset risk.
- Scorecard: Provides a consistent method for evaluating the structural integrity of blended funds and how well they balance investor priorities.
Objectives
The toolkit aims to:
- Simplify the design of blended finance funds to make them more attractive to private investors.
- Provide clarity for both commercial and concessional investors.
- Offer a structured reference for fund managers during design and capital raising.
Statements from Key Figures
- Leslie Maasdorp, Chief Executive of BII, stated: “Our report identifies how a blended finance fund can be a made-to-measure proposition, rather than a bespoke proposition that understandably is off-putting to all but the most devoted impact investors.”
- Rich Hutchinson, Global Head of Social Impact at BCG, commented: “Scaling blended finance isn’t just a technical challenge—it’s a systems challenge. These tools bring structure to that complexity and offer fund managers and investors a shared language to accelerate progress.”
Impact and Future Outlook
Blended finance structures, which combine public, philanthropic, and private capital, are vital for advancing sustainable development and climate resilience in markets traditionally overlooked by commercial investors. Despite their potential, these structures have only drawn around $15 billion per year globally, primarily due to their complexity and high setup costs. The new toolkit aims to address these barriers and unlock billions in capital for emerging markets and climate action.
By aligning design practices with the expectations of institutional investors, BII and BCG hope the toolkit will significantly lower the barrier to entry for private capital and drive high-integrity investment into the sectors and regions most in need.
For more information, you can read the full report here. (BII)
