blended finance for conservation
TRANSCRIPT
BLENDED FINANCE
FOR CONSERVATION
UNLOCKING PRIVATE SECTOR FINANCE
FOR SUSTAINABLE LANDSCAPE
MANAGEMENT WORKSHOP
MARCH 21, 2019
CONVERGENCE
WHAT IS CONVERGENCE?
2
Convergence is the global network for blended
finance. We generate blended finance data,
intelligence, and deal flow to increase private
sector investment in developing countries.
A GLOBAL NETWORK
We have a global membership of over 300 public,
private, & philanthropic institutions
DATA & INTELLIGENCE
Original content builds the evidence base for blended
finance, including data on past deals, trend reports,
case studies, region and sector briefs, and webinars.
DEAL FLOW
An online match-making platform for investors and
those seeking capital to connect on active deals.
MARKET ACCELERATION
Our Design Funding program awards grants for the
design of innovative vehicles that aim to attract
private capital to global development at scale.
CONVERGENCE 4
WHAT IS BLENDED FINANCE?
Source: Convergence
Private investment is crucial to close the $2.5 trillion annual funding gap threatening the
success of the Sustainable Development Goals (SDGs). One way to attract this private capital
is through blended finance – the use of catalytic capital from public or philanthropic sources
to increase private sector investment in emerging markets.
PRIVATE
CAPITAL
MobilizingBLENDED
FINANCE
STRUCTURES
Market-rate
Concessional
DEVELOPMENT
FUNDING
(Public/philanthropic
funders)
Blended finance transactions should have three signature markings:
1. Expected positive financial return
2. Contribute towards achieving the SDGs (not every participant needs
to have that development objective)
3. Public or philanthropic parties are catalytic (improve the risk/return
profile to attract participation from the private sector)
CONVERGENCE
CONCESSIONAL DEBT
OR EQUITY
GUARANTEE & RISK
INSURANCE
DESIGN / PREPARATION
FUNDING GRANT
TECHNICAL ASSISTANCE
GRANT
• Public or philanthropic
investors are concessional
within the capital structure
• Risk reduction tools that
protect investors against
capital losses
• Grant funding that supports
costs and activities that lead
to bankability of projects
• Funds to supplement the
capacity of investees
5
BLENDED FINANCE ARCHETYPES
Source: Convergence
CAPITAL STRUCTURE
Senior Debt
Flexible Debt
Equity
Junior Equity
CAPITAL STRUCTURE
Senior Debt
Guar
ante
e
Equity
CAPITAL
STRUCTURE
Senior
Debt
Gra
nts
Equity
CAPITAL STRUCTURE
Senior Debt
Equity
TA FACILITY
Grants
CONVERGENCE
42 52 67 81105
132170
210246
289326
362397 408
$0B
$20B
$40B
$60B
$80B
$100B
$120B
$140B
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Bill
ions
Aggregate Deal Count Aggregate Value
6
CURRENT MARKET ESTIMATE
Source: Convergence Historical Deals Database
$126B+mobilized to-date
3,000+financial commitments
1100+investors
CONVERGENCE
5 6 8 9 1115
2228 29
38 3942
49 50
$0B
$2B
$4B
$6B
$8B
$10B
$12B
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Bill
ions
Aggregate Deal Count Aggregate Value
CURRENT MARKET ESTIMATE
8
$10B+mobilized to-date
340+financial commitments
60+active investors
Source: Convergence Historical Deals Database
CONVERGENCE
Source: Convergence Historical Deals Database
Convergence tracks country data by stated countries of focus at the time of financial close, not actual investment flows. Often, countries of eligibility are broader than those explicitly stated.
REGION FOCUS
9
Latin America &
the Caribbean
20% 38%
Sub-Saharan
Africa
44% 30%
East Asia &
Pacific
11% 6%
Middle East &
North Africa
15% 16%
South Asia
15% 8%
Europe &
Central Asia
4% 0%
Global
17% 28%
ALL
DEALs
SUSTAINABLE
LAND
MANAGEMENT
PERCENTAGE OF DEALS
CONVERGENCE
SUSTAINABLE
LAND
MANAGEMENT
$173M
$403M
$121M
$274M
AVERAGE DEAL SIZE
34%
28%
17%
47%
Technical Assistance Funds
Guarantee / Risk Insurance
Design-Stage Grant
Concessional Capital
PERCENTAGE OF DEALS
10
BLENDED FINANCE ARCHETYPES
Source: Convergence Historical Deals Database
ALL
DEALS
$59M
$541M
$63M
$108M
48%
24%
22%
60%
Technical Assistance Funds
Guarantee / Risk Insurance
Design-Stage Grant
Concessional Capital
CONVERGENCE 11
LEAGUE TABLES
Source: Convergence Historical Deals Database
DEVELOPMENT
AGENCIES & FUNDS
3
4
4
5
7
8
9
14
14
AfDB
Finnfund
CFC
PROPARCO
OPIC
IDB Invest
IFC
FMO
EIB
DEVELOPMENT BANKS &
FINANCE INSTITUTIONS
2
2
2
2
2
2
2
3
4
Shell Foundation
Postcode Lottery
Fund
Lundin Foundation
Kiva
Greater Impact
Foundation
Grantham Foundatio
Blue Moon Fund
Rockefeller
Conservation
International
FOUNDATIONS
& NGOS
2
2
2
2
3
3
3
3
5
Standard Chartered
Keurig Dr. Pepper
JP Morgan Chase & Co
Danone
Oikocredit
Calvert Impact Capital
AgDevCo
Schneider Electric
GEF (Fund)
COMMERCIAL &
IMPACT INVESTORS
2
2
3
4
5
7
9
10
13
NICFI
FAO
DFID
Dutch
MFA
GEF
(Facility)
AFD
MIF
GCF
USAID
CONVERGENCE 12
INVESTOR PROFILE: GREEN CLIMATE FUND
• GCF aims to leverage concessional public capital to
catalyze a flow of climate finance (including private
finance) to invest in low-emission and climate-resilient
development.
• GCF provides financing in the form of grants, loans,
equity or guarantees in eight strategic areas:
MitigationAdaptation
CONVERGENCE
Fund
50%Project
25%
Company
14%
Facility
7%
Bond / Note
2%
Impact bond
2%
DEAL TYPE
15
DEAL TYPE & SIZE
$682 M
$610 M
$175 M
$105 M
$47 M
Facility
Project
Fund
Company
Bond / note
AVERAGE DEAL SIZE
Source: Convergence Historical Deals Database
Company
14%
Facility
10%
Fund
66%
Impact
bond
2%
Project
8%
$0 M
$16 M
4510%M
$146 M
$278 M
Impact bond
Company
Project
Facility
Fund
ALL
DEALS
SUSTAINABLE
LAND
MANAGEMENT
CONVERGENCE
SUSTAINABLE
LAND
MANAGEMENT
$260M
$189M
$714M
$212M
$542M
$37M
$94M
AVERAGE DEAL SIZE
13%
1%
6%
25%
29%
2%
13%
Infrastructure
Housing and Real Estate
Health
Financial Services
Energy
Education
Agriculture
PERCENTAGE OF DEALS
16
SECTOR FOCUS
Source: Convergence Historical Deals Database
ALL
DEALS
$102M
$52M
$908M
$67M
$113M
6%
18%
14%
24%
60%
Infrastructure
General
Financial Services
Energy
Agriculture