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Blended Finance

Welcome to Convergence's blended finance primer. The primer leverages Convergence's database of historical blended finance transactions to generate unique insights about the blended finance market to date. Convergence's data methodology can be viewed here.


Blended finance is the use of catalytic capital from public or philanthropic sources to increase private sector investment in sustainable development.
Blended finance is a structuring approach that allows organizations with different objectives to invest alongside each other while achieving their own objectives (whether financial return, social impact, or a blend of both). The main investment barriers for private investors addressed by blended finance are (i) high perceived and real risk and (ii) poor returns for the risk relative to comparable investments. Blended finance creates investable opportunities in developing countries which leads to more development impact.
Blended finance is not an investment approach, instrument, or end solution. It is also different from impact investing. Impact investing is an investment approach, and impact investors often participate in blended finance structures.
Convergence focuses on blended finance in developing countries. Developing countries face significant challenges including low levels of access to safe drinking water, sanitation and hygiene; energy poverty; high levels of pollution; high rates of tropical and infectious diseases; and a lack of physical infrastructure. Blended finance can create investment opportunities in developing countries, crowding in additional private sector funds in volumes never before seen.
Convergence focuses on blended finance to catalyze private investment. Other important stakeholders and initiatives, such as the Organization for Economic Co-operation and Development (OECD) and the DFI Working Group on Blended Concessional Finance for Private Sector Projects focus on a broader scope of blended finance that includes the use of development capital to mobilize commercial-development orientated public capital (e.g., capital from development finance institutions). Convergence works closely with the OECD, DFI Working Group, and others to coordinate blended finance activity.


The Sustainable Development Goals (SDGs) are a set of 17 Global Goals set by the United Nations (UN) that aim to tackle a range of issues, from combating climate change to ending poverty and hunger. Not only do the SDGs aim to create a world that is more sustainable, they also offer real business opportunities.
To achieve the SDGs, a significant scale-up of investment is required today. The UN estimates that the total financing needed to achieve the SDGs is nearly $4 trillion annually. Current levels of development financing are not sufficient, with an estimated $2.5 trillion funding gap per annum to realize the SDGs in developing countries alone.
Blended finance is one critical approach to mobilize new sources of capital for the SDGs. UN member countries reached consensus on the importance of deploying public funds to attract private investment at the Third International Conference on Financing for Development in 2015 in Addis Ababa. Convergence, along with the Sustainable Development Investment Partnership (SDIP), were established out of the Addis Ababa Action Agenda to build the blended finance market.
Blended finance can only address a subset of SDG targets that are investable. For example, blended finance is highly aligned with goals such as Goal 8 (Decent Work and Economic Growth) and Goal 13 (Climate Action), while less aligned with SDGs such as Goal 16 (Peace, Justice and Strong Institutions).


Blended finance transactions should have three signature characteristics:
  1. The transaction contributes towards achieving the SDGs. However, not every participant needs to have that development objective. Private investors in a blended finance structure may simply be seeking a market-rate financial return.
  2. Overall, the transaction expects to yield a positive financial return. Different investors in a blended finance structure will have different return expectations, ranging from concessional to market-rate.
  3. The public and/or philanthropic parties are catalytic. The participation from these parties improves the risk/return profile of the transaction in order to attract participation from the private sector.


Blended finance is a structuring approach. Blended finance is not an investment approach, instrument, or end solution. Convergence identifies four common blended finance structures:
SDG Poster
Public or philanthropic investors provide funds on below-market terms within the capital structure to lower the overall cost of capital or to provide an additional layer of protection to private investors (referred to as concessional capital in this primer).
SDG Poster
Public or philanthropic investors provide credit enhancement through guarantees or insurance on below-market terms (referred to as guarantee / risk insurance in this primer).
SDG Poster
Transaction is associated with a grant-funded technical assistance facility that can be utilized pre- or post-investment to strengthen commercial viability and developmental impact (referred to as technical assistance funds in this primer).
SDG Poster
Transaction design or preparation is grant funded (including project preparation or design-stage grants) (referred to as design-stage grants in this primer).

Market Size

Blended finance has mobilized approximately $161 billion in capital towards sustainable development in developing countries to-date. Convergence has identified approximately 3,700 financial commitments to these blended finance transactions.
Convergence curates and maintains the largest and most detailed database of historical blended finance transactions to help build the evidence base for blended finance. Given the current state of information reporting and sharing, it is not possible for this database to be fully comprehensive, but it is the best repository globally to understand blended finance scale and trends. Convergence continues to build out this database to draw better insights about the market and disseminates this information to the development and finance communities to improve the efficiency and effectiveness of blended finance to achieve the SDGs.
While blended finance has gained increased attention in recent years, it is an approach that has been leveraged for some time, which is reflected in the number of transactions and total deal volume to-date. The blended finance market is substantial and growing and is comparable to other important markets. According to the GIIN, impact investing assets under management in 2018 were around $230 billion, while, according to the OECD, official development assistance (ODA) to developing countries in 2017 was around $145 billion.

Deal Sizes and Types

Blended finance transactions range considerably in size, from a minimum of $110,000 to a maximum of $8 billion. The median blended finance transaction has been $64 million in total size (2010-2018).
Funds (e.g., equity funds, debt funds, and funds-of-funds) have consistently accounted for the largest share of blended finance transactions, although we have seen more diversification across transaction types in recent years.


Sub-Saharan Africa has been the most frequently targeted region in blended finance transactions. In recent years, we’ve seen Asia emerge as a frontier for blended finance.
Kenya, India, and Uganda have been the most frequently targeted countries in blended finance transactions.


Energy has been the most frequently targeted sector in blended finance transactions, followed by Financial Services. Generalist structures targeting multiple segments have also been common.

SDGs and Impact

Goal 17 (Partnerships for the Goals), Goal 08 (Decent Work & Economic Growth), Goal 09 (Industry, Innovation, & Infrastructure), and Goal 01 (No Poverty) have been the most frequent SDG targets in blended finance transactions.


In the database, over 1450 unique investors have participated in one or more blended finance transactions.
Over 50% of investors have been private, with public and philanthropic investors evenly split at around 25% each.
~20% investors have participated in three or more blended finance transactions. The majority of investors have only participated in one blended finance transaction.

Private Investors

The most active private investors in blended finance have included Ceniarth LLC, Standard Chartered Bank (StanChart), Calvert Impact Capital, responsAbility Investments AG, and Société Générale (SocGen). Many of the most active private investors have an explicit impact-mandate, either as a whole or the specific branch/unit with the relevant focus (e.g., sustainable finance).

Public Investors

Philanthropic Investors

The most active philanthropic investors in blended finance have included Shell Foundation, Bill & Melinda Gates Foundation, Omidyar Network, and Oikocredit.

Learn More

Convergence members have access to:
  • Detailed information for each blended finance transactions in the database.
  • Detailed information on active investors in blended finance and their investment trends.
  • Additional insights and analysis for specific investors, blending archetypes, SDGs, sectors, and regions.
  • In-depth case studies for select transactions, describing the design process, structure, impact to-date, and summary learnings.
  • Trend briefs and other research on the blended finance market.
  • A range of additional products and services.
Learn more about Convergence membership here.