BlackRock, partners launch US$500m climate-related infrastructure investments fund

Parties to the Climate Finance Partnership (CFP) have taken another step forward in their partnership to accelerate the flow of capital into climate-related investments in emerging markets, reaching agreement on the core terms and structure of their flagship blended finance investment vehicle. The parties to the CFP are France, Germany, the Hewlett and Grantham foundations, and BlackRock.

CFP investments will be targeted toward select countries in South East Asia, Latin America, and Africa. Notably, investments in Africa will account for at least 25% of the total capital invested. The vehicle’s focus on what is generally referred to as climate infrastructure sector will include; (i) grid-connected and/or distributed generation renewable energy power; (ii) energy efficiency in residential, commercial and/or industrial sectors; (iii) energy storage solutions; and (iv) ultra-low emission or electrified transportation and mobility services.

The vehicle will feature a first-loss tranche of at least US$100 million in catalytic capital, anchored by government and foundation partners, that BlackRock will use to mobilize a goal of at least US$400 million in institutional capital commitments. This would result in a minimum size of US$500 million at first close and CFP parties share a collective goal of further scaling the vehicle going forward.

The Governments of France, through the French Development Agency (AFD), and Germany, with the KfW acting as a trustee, intend to contribute US$30 million each to the partnership. The William and Flora Hewlett Foundation and the Jeremy and Hannelore Grantham Environmental Trust have committed US$10 million and US$7.5 million respectively. CFP parties have committed to help raise the additional capital required to reach the US$100 million in catalytic capital.

The CFP is BlackRock’s first vehicle focused on climate infrastructure investments in emerging markets. BlackRock, the world’s largest asset manager, has extensive experience in renewable power and sustainable investing and is committed to factoring climate- and other environmental-related risks into their investment and risk management processes, including developing new approaches to measuring physical climate risks, and stress testing portfolios for future carbon price scenarios. The CFP is part of BlackRock’s ongoing efforts to provide investors with more and more ways to invest their capital in strategies that accelerate the global low-carbon transition.