Convergence Eventbrite

__Thursday, November 12th 2020, 9am – 11:30am Singapore time (GMT +8):__

[Register](https://attendee.gotowebinar.com/register/851825053191785999 "Register for the event")

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This 2.5-hour (150 minutes) interactive seminar will cover:

- How blended finance can mobilize additional private sector financing for water and sanitation;
- The rationale and considerations behind using blended finance instruments;
- Case studies and trend analysis on transactions in these sectors; and
- Recommendations to practitioners on leveraging blended finance effectively.

This seminar discusses where and how blended finance approaches can be used to attract additional commercial capital to viable projects, allowing traditional development aid to refocus on projects that should not attempt to or cannot attract private capital. Convergence members will share their insights, and participants will discuss current initiatives in small groups.

This is the first seminar in our five-part series “Blended Finance in Select Sectors". You are welcome to register even if you have not attended any of the preceding seminars.

*The seminar has limited space to ensure an intensive and practice-driven learning experience. We recommend that no more than two representatives from each organization attend. Registration is complimentary for members, applying the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*


Blended Finance for Water and Sanitation (Asia/West Coast)

Blended Finance for Water and Sanitation is the first seminar in Convergence's series "Blended Finance in Select Sectors".

__Wednesday, November 11th 2020, 10am – 12:30pm Eastern time (GMT -5):__

[Register](https://register.gotowebinar.com/register/4266437578087425551 "Register for the event")

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This 2.5-hour (150 minutes) interactive seminar will cover:

- How blended finance can mobilize additional private sector financing for water and sanitation;
- The rationale and considerations behind using blended finance instruments;
- Case studies and trend analysis on transactions in these sectors; and
- Recommendations to practitioners on leveraging blended finance effectively.

This seminar discusses where and how blended finance approaches can be used to attract additional commercial capital to viable projects, allowing traditional development aid to refocus on projects that should not attempt to or cannot attract private capital. Convergence members will share their insights, and participants will discuss current initiatives in small groups.

This is the first seminar in our five-part series “Blended Finance in Select Sectors". You are welcome to register even if you have not attended any of the preceding seminars.

*The seminar has limited space to ensure an intensive and practice-driven learning experience. We recommend that no more than two representatives from each organization attend. Registration is complimentary for members, applying the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*


Blended Finance for Water and Sanitation (Europe/East Coast)

Convergence logo official

Convergence is proud to have been selected to participate in this year's SOCAP Virtual Conference, taking place October 19 - 23. This year, our session is on __Creating Better Structures for Better Resiliency__.

[REGISTER TODAY](https://socialcapitalmarkets.net/socap-virtual/#register "SOCAP | Registration") using the code SPK20 for a 20% discount off the current price.

The COVID-19 pandemic threatens the achievement of the Sustainable Development Goals for a host of different reasons, none of which will be solved without greater private capital flowing towards development projects in developing countries. Blended finance is a structuring approach that has proven to invite diverse investors, foster multi-stakeholder collaboration and mobilize greater capital towards the environment and social impact. But, it has yet to generate a consistent stream of transactions that attract institutional money, so the billions-to-trillions goal remains tantalizingly out of reach. __How do we get there to realize our goals this decade of impact?__

This interactive session will explore the role of blended finance in mobilizing capital towards developing projects, while enabling cooperation, collaboration and multi-stakeholder engagement. We’ll kick-off with a sweeping view of the field, noting some of the innovative, scalable, blended transactions that have hit the global market, and review the mandates of the catalytic and commercial actors in these deals. Then, participants will then break out into small group sessions, each focused on a recently closed or live blended transaction led by one of the participants of that transaction to deep-dive into the:

- Structuring

- Terms and negotiation points of each player in the deal

- Fundraising strategy used by deal sponsors seeking catalytic and commercial capital and, how they overcame inherent barriers

- Tension between innovation and standardization

__CONFIRMED PANELISTS__

Joan Larrea, Chief Executive Officer, Convergence

Safia Gulamani, Associate Director, Client Services, Convergence

Adhiti Gupta, Manager, Market Acceleration and Design Funding, Convergence

Aakif Merchant, Manager, Training and Engagement, Convergence

Robert Weary, Deputy Managing Director, Blue Bonds, The Nature Conservancy 

Creating Better Structures for Better Resiliency

Convergence is proud to have been selected to participate in this year's SOCAP Virtual Conference, taking place October 19 - 23. This year, our session is on __Creating Better Structures for Better Resiliency__.

This session will focus on education and workforce development, and will specifically showcase solutions providing increased access to post-secondary education or adult training for communities disproportionately affected by the health and economic crisis resulting from COVID-19. 

R3 Coalition Co-Investment Convening | Education

__Wednesday, September 9th 2020, 10am – 12:30pm Eastern time (GMT -4):__

This seminar is at full capacity.

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This 2.5-hour (150 minutes) interactive seminar will cover:

  - How concessional/ first-loss capital is used to mobilize additional private sector financing;
  - The rationale and considerations behind structuring layered funds;
  - Case studies and trend analysis on blended finance transactions with concessional/ first-loss capital; and
  - Recommendations to practitioners on leveraging this catalytic instrument effectively.

This seminar will focus on transactions where public or philanthropic investors provide funds on below-market terms within a capital structure of a fund, company or project. First-loss (or junior) equity and subordinated debt provide an additional layer of protection, thereby shifting the risk-return ratio for private investors to an acceptable level, while also lowering the overall cost of capital for the fund, company or project.

This is the last seminar in our four-part series “A Closer Look at Blended Finance Instruments". You are welcome to register even if you have not attended any of the preceding seminars.

*The seminar has limited space to ensure an intensive and practice-driven learning experience. We recommend that no more than two representatives from each organization attend. Registration is complimentary for members, applying the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*


Blending with Concessional and First-Loss Capital (Europe/East Coast)

Blending with Concessional and First-Loss Capital (Europe/East Coast) is the fourth seminar in our four-part seminar series “A Closer Look at Blended Finance Instruments".

Blending with Concessional and First-Loss Capital (Europe)

R3 Coalition Virtual Co-Investment Convenings are investor-only sessions designed to facilitate the acceleration of financing into investments addressing the negative effects of COVID. 

During the convening, co-investment opportunities will be presented by investors already investing in or are undergoing conducting diligence on the investment. Each investment opportunity will have a 10-minute presentation and will be followed by ~10 minutes for follow-up questions. 

Descriptions of the investments being presented can be found [here](https://www.eventbrite.com/e/r3-coalition-virtual-co-investment-convening-food-security-sept-3-registration-116722444975?utm_source=R3+Coalition+Master+List&utm_campaign=7105fa4629-EMAIL_CAMPAIGN_2020_08_26_05_42&utm_medium=email&utm_term=0_c2d23e7b83-7105fa4629-216047798 "R3 Coalition | Virtual Co-Investment Convening | Food Security - Sept 3"), along with the specific 20-minute time block for each investment presentation. 

Participants are welcome to hop in and out of this virtual meeting to attend the presentations that best align with their impact investing strategies.

R3 Coalition | Virtual Co-Investment Convening | Food Security

R3 Coalition Virtual Co-Investment Convening to facilitate the acceleration of financing into investments addressing food security.

Virtual Co-Investment Convening on Food Security

In this webinar, Ladé Araba, Managing Director, Africa at Convergence will discuss the variety of blended finance structures that exist today and how investors can construct diversified portfolios using these approaches to achieve their mandates.

How Institutional Investors Can Leverage Blended Finance

In this webinar, Ladé Araba, Managing Director, Africa at Convergence Blended Finance, will discuss the variety of blended finance structures that exist today and how investors can construct diversified portfolios using these approaches to achieve their mandates.

How institutional investors can leverage blended finance

__Thursday, July 30th, 9am – 11:30am SGT (GMT+8)__

Registration closed. This seminar is at full capacity.

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Blending with Design and Preparation-stage Grants is a 2.5-hour (150 minutes) interactive seminar that will cover:
- How project preparation grants and design funding are used to mobilize additional private sector financing
- The potential of early-stage grants to accelerate the blended finance market
- Case studies on programs that leverage preparation-stage grants and design funding to build a pipeline of investable projects/funds/companies 
- Recommendations to practitioners on deploying these grants effectively 

Blended finance transactions can be complex, time intensive, and highly costly to structure and launch. Preparation grants support technical studies to prove a project’s viability. Design funding is used for feasibility studies, to assess the bankability of a transaction, or proof of concept, to complete design and structuring activities to launch a transaction. Both types of grants are instrumental in building the pipeline of investable opportunities.

This is the third seminar in our four-part seminar series “A Closer Look at Blended Finance Instruments". Even if you missed previous seminars, you are welcome to register.

*The training has limited space to ensure a personal, intensive and practice-driven learning experience. All participants will receive the presentation slides afterwards. We recommend that no more than two representatives from each organization attend.*


Blending with Design and Preparation-stage Grants (Asia/West Coast)

Blending with Design and Preparation-stage Grants is a 2.5-hour (150 minutes) interactive seminar in our four-part seminar series “A Closer Look at Blended Finance Instruments".

Blending with Design & Prep-stage Grants (Asia/West Coast)

__Registration closed. This seminar is at full capacity.__


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Blending with Technical Assistance is a 2.5-hour (150 minutes) interactive seminar that will cover:

  - How Technical Assistance is used in blended finance transactions;
  - How Technical Assistance can de-risk investments and strengthen development impact;
  - Case studies and trend analysis on the use of Technical Assistance in blended finance transactions; and
  - Recommendations to practitioners on deploying Technical Assistance efficiently.

Technical Assistance is a versatile development tool that can be deployed to mobilize additional sources of finance for the Sustainable Development Goals (SDGs). The use of grant-funded technical assistance facilities can strengthen commercial viability and developmental impact. Technical Assistance can be vital to support project preparation, project implementation, and the broader business and policy environment.

This is the second seminar in our four-part seminar series “A Closer Look at Blended Finance Instruments". Even if you missed the first seminar (Blending with Guarantees) you are welcome to register.

*The training has limited space to ensure a personal, intensive and practice-driven learning experience. We recommend that no more than 2-3 representatives from each organization attend. Registration is complimentary for members, applying the __discount code__ you received via e-mail. Non-members can register for a fee of $150.*



Blending with Technical Assistance (America/Europe/Africa)

Blending with Technical Assistance (America/Europe/Africa) is the second seminar in our four-part seminar series “A Closer Look at Blended Finance Instruments".

Blending with Guarantees is a 2.5-hour (150 minutes) interactive seminar that will cover:
- how guarantees are used in blended finance transactions;
- the issues that impact the effectiveness of this financial instrument; 
- case studies and comparisons on the use of guarantees, and 
- recommendations to practitioners on deploying guarantees efficiently. 

The development community utilizes various financing tools, ranging from grants, equity investments and loans, to guarantees and insurance products. Through guarantees on below-market terms, public or philanthropic investors provide credit enhancement to commercial investors. Guarantees offer a compelling opportunity to mobilize private sector investment towards SDG-aligned projects in emerging and frontier markets.

This is the first seminar in our four-part seminar series “A Closer Look at Blended Finance Instruments".

*The training has limited space to ensure a personal, intensive and practice-driven learning experience. We recommend that no more than 2-3 representatives from each organization attend. Registration is complimentary for members. Non-members can register for a fee of $150. *


Blending with Guarantees (Asia time)

Blending with Guarantees (Asia time) is the first seminar in our four-part seminar series “A Closer Look at Blended Finance Instruments".

Demystifying Blended Finance is a 3-hour interactive workshop designed to offer members and partners a comprehensive understanding of how blended finance can mobilize higher levels of capital for projects in developing counties. The workshop will offer a brief overview of blended finance and trends across the ecosystem, along with a deeper understanding of the financial rationale for using blended finance; and reviewing practical applications of how blended finance structures have been used to capitalize projects in emerging and frontier markets.

The training has limited space to ensure a personal, intensive and practice-driven learning experience. __We recommend that no more than 1-2 representatives from each organization attend.__

Virtual Learning Seminars: Demystifying Blended Finance

Demystifying Blended Finance is a 3-hour interactive workshop designed to offer members and partners a comprehensive understanding of how blended finance can mobilize higher levels of capital for projects in developing counties.

Recently, Convergence participated in the Criterion Institute’s “Convergence XVII: Financing the reduction of gender-based violence” [conference](https://criterioninstitute.org/convergence/your-invitation-to-move-ideas-to-action-convergence-our-reimagined-digital-conference "Criterion Institute | Convergence XVII: Financing the reduction of gender-based violence"). Reducing gender-based violence (GBV) is key to realizing equal rights and opportunities across genders. Yet, GBV seldom gets the same attention as other gender-related topics, such as equal access to resources, equal representation in decision-making, and equal pay. 

Convergence – our firm that is, not Criterion’s fortuitously named event – is the global network for blended finance. We have built a membership that includes private investors looking to diversify their portfolios, businesses seeking capital, as well as public agencies and philanthropic foundations, all focused to drive capital towards projects aiming to achieve the Sustainable Development Goals. In learning more about the role of finance in addressing GBV, Convergence has identified ways its community can help reduce violence against women and girls. 

Here, we share some of those approaches. In doing so, it is important to recognize that efforts to reduce GBV must be met with a strong understanding of the local culture, people and history, and adequate local representation. Without this awareness and connectedness, good actions can lead to bad unintended consequences. Consulting gender specialists and local stakeholders before implementing any action or strategy is therefore crucial.
 

## 1. Identify and support companies and projects that work to reduce gender-based violence
 

The most straightforward strategy discussed at Criterion Institute’s conference is to support social enterprises whose business models address GBV directly. One example is the Nepalese company [Fightback](https://fightbacknepal.com/ "Fightback"), which provides mental, vocal and physical self-defense training to girls and young women to reduce and mitigate the risk of sexual violence. Fightback was one of [75 businesses](https://www.springaccelerator.org/who-we-are/partners/ "75 businesses") that received support from the SPRING accelerator, a 5-year program for businesses to innovate and improve the lives of adolescent girls across East Africa and South Asia. This accelerator was backed by three Convergence members; the UK’s Department for International Development, the U.S. Agency for International Development and the Australian Department of Foreign Affairs and Trade. This [newly released report](https://static1.squarespace.com/static/5b156e3bf2e6b10bb0788609/t/5f3daa486324e8642c0d031a/1597876821091/Innovating+to+Address+GBV+Final+081920.pdf "IDIA | Innovating to Address Gender-Based Violence") by the International Development Innovation Alliance’s Gender & Innovation Working Group lists a range of enterprises, projects and approaches that help prevent and reduce GBV.

 

## 2. Design or invest in financial structures that aim to increase women’s economic independence 
 

Among the many reasons why women affected by violence cannot just leave the situation is because they lack control over financial resources. Designing and investing in transactions that enable women to access capital, whether for education or for their business, is one way to mitigate GBV and place women and girls in positions of power. 

[Chancen International](https://chancen.international/ "Chancen International"), a Convergence member, shows how this can be done. The social enterprise with offices in Germany and Rwanda designed the Future of Work Fund, a USD 20 million debt vehicle that enables women and men to obtain tertiary education. The fund pays for their education up front, and students repay after graduating, using a percentage of their income over a number of years. In comparison with traditional student loans, these so-called income share agreements (ISAs) do not require any collateral and are designed so graduates only pay when they earn above the minimum income threshold. 

[MCE Social Capital](https://www.mcesocap.org/about-us "MCE Social Capital"), a non-profit impact investing firm, has developed a loan guarantee model to generate economic opportunity for women and families living in poverty. MCE uses these guarantees to lend to microfinance institutions and small and medium-sized enterprises (SMEs) in developing countries. It has so far disbursed more than USD 200 million in loans, reaching 55 countries. Lastly, the [CARE-SheTrades Fund](http://www.bamboocp.com/the-international-trade-centre-care-enterprises-and-bamboo-capital-partners-join-forces-to-boost-gender-equality-with-the-care-shetrades-impact-fund/ "CARE-SheTrades Fund"), a partnership between CARE Enterprises Inc., Convergence member Bamboo Capital, and the International Trade Centre (ITC), lends to women-led and women-owned businesses in [South and Southeast Asia](https://www.convergence.finance/news-and-events/news/4TEBJjU9fzApNJ9rdmZOEm/view "Convergence | Blended Finance and Gender-Lens Investing"). Its target size of USD 75 million is composed of a senior tranche of USD 60 million and USD 15 million as first loss capital.

 

## 3. Partner with media companies that address how gender norms are being portrayed 
 

In many sessions at Criterion Institute’s conference, participants reiterated the need to transform gender norms and fight bias. Given that the media influences social attitudes and norms, partnering with advertisement agencies, radio stations, and media companies that address how gender norms are portrayed, and are actively working to break away from biases, for example against [LGBTQI people](https://www.convergence.finance/resource/76LKQgvu9fWYgHAFLR8KnC/view "Convergence | Investing with an LGBTQI lens - Rethinking Gender Analysis Across Investing Fields"), is therefore another approach to help reduce GBV.

[The Media Development Investment Fund](https://www.mdif.org/ "The Media Development Investment Fund"), a Convergence member, provides affordable debt and equity to SMEs in the media sector with high social impact. In this [case study](https://www.convergence.finance/resource/6Sr4O5FBxin7Jh5aBXe6nQ/view "Media Development Investment Fund Case Study"), Convergence reflects on the fund manager’s history in providing over USD 200 million in loans and equity investments as well as USD 30 million in technical assistance grants to over 120 independent media companies across 42 countries. Amongst others, the fund works with Radio Daljir, a Somalian radio station that covers topics such as gender, education, and health. 

 

## 4. Adopt internal organizational policies that address GBV and continue conversations 
 

Institutionalizing a zero-tolerance policy towards GBV, both internally and in affiliated/invested projects, is another step forward. For internal gender violence considerations, [this resource](https://malechampionsofchange.com/wp-content/uploads/2020/07/Employees-who-use-domestic-and-family-violence_FINAL.pdf "Employees who use domestic & family violence: A workplace response ") offers guidance in addressing and tackling challenges in the workplace. Additionally, investors should integrate GBV considerations in their due diligence process (see [this guide](https://www.unicef.org/documents/mitigating-risks-gender-based-violence-due-diligence-guide-investing "UNICEF | Mitigating the Risks of Gender-Based Violence: A Due Diligence Guide for Investing") for investors and [this letter of intent](https://criterioninstitute.org/engage/letter-of-intent-seeking-investments-that-address-gender-based-violence "Criterion Institute | Letter of Intent Seeking Investments that Address Gender-based Violence")). Not only is this good practice to reduce investment risk, but it also signals commitment to reduce GBV to potential investees. 

GBV data and resources need to be translated and connected with financial performance, ideally by financial experts, so that investors can put relevant data to better use. Integrating GBV research into methodologies that assess market risk of investments and pricing these risks appropriately would strengthen investors’ decision-making about where to place their capital. 

Last but not least, leaders are encouraged to ensure GBV remains a part of regular discourse within their organizations to ensure related issues come to the surface. 

The conversations hosted by Criterion Institute have allowed impact investors, civil society organizations, and development practitioners to huddle together to act on GBV. As the leading market builder for blended finance, Convergence will continue to participate in discussions that will introduce new pathways for how blended finance can aid the fight against GBV.

*__Are you working on a blended finance transaction addressing gender-based violence? [Contact us](https://www.convergence.finance/contact "Convergence | Contact Us") to learn more about opportunities to gain visibility with funders and investors in the Convergence network, or check out our [Resource Library](https://www.convergence.finance/resource "Convergence | Resource Library") to learn about blended finance advancing SDG 5.__*

In learning more about the role of finance in addressing GBV, Convergence has identified ways its community can help reduce violence against women and girls. 

What can Blended Finance Do to Address Gender-based Violence

What can the Blended Finance World Do to Address Gender-based Violence?

[SunFunder](https://www.sunfunder.com/ "SunFunder") is a specialist debt provider and fund manager based in Nairobi and London, financing solar energy companies and projects in Sub-Saharan Africa and Asia, where there is often limited access to reliable and affordable electricity. 

As one of the few debt providers for solar financing in emerging markets, SunFunder has unlocked USD 150 million in debt financing through public and private investors and has financed over 50 solar companies and projects. Through blended debt funds–blending catalytic capital with private capital– SunFunder is working towards __Sustainable Development Goal (SDG) 7–Clean and Affordable Energy__, with an interest in increasing commercial investment in solar lighting, home systems, mini-grids, agri-solar, and commercial solar projects.

With plans to unlock billions for solar financing, Convergence connected with Ryan Levinson, Co-founder and CEO of SunFunder, to learn more about solar financing, debt funds and the impact of COVID-19 in advancing affordable clean energy in emerging markets.
 
## What made you decide to address solar finance given the multitude of development challenges in emerging economies? 
 

It was based on the dual passion Audrey Desiderato, SunFunder’s other co-Founder, and I had, regarding the world’s pervasive development challenges, specifically around energy poverty and the current and worsening climate crisis. In 2012 when SunFunder was born, we believed financing clean energy in emerging markets was an ideal way to hit on those two big issues. Therefore, our mission is very much oriented towards contributing to solutions that address both clean energy and access to affordable energy in emerging markets and underserved communities around the world. 

Choosing solar finance boils down to the technological viability and affordability of this clean energy source. When I began financing solar projects at Wells Fargo in 2007, total installation costs for Solar PV Systems averaged around $6 to $7/Watt. We have seen the cost drop dramatically over the past 10 years. Now, that same system costs about $1-2/Watt – that is around an 80% drop in the cost of solar project installations. The technology has gone from being one of the most expensive sources of energy in the world to one of the cheapest. When you partner that with battery technology, which enables solar energy to be the around-the-clock solution, the combination is ideal in delivering affordable, clean energy that is scalable, especially for over 2 billion people who lack access to reliable energy. 
 
## What are some unique challenges facing solar financing in Sub-Saharan Africa and what makes a blended debt fund particularly useful? 
 
The solar financing sector faces challenges felt by other investments in emerging economies, including foreign currency and country/political risks. In themselves these common external factors can make it difficult to secure new investors and increase investments. More specifically, in the clean energy and solar space, other challenges include how new some of these business models are, how hard it is to distribute products in remote areas, or for larger projects the lack of infrastructure more generally. On top of this, the solar sector among others increasingly face the implications of climate change events, such as hurricanes, floods and droughts, which create challenges for solar companies, their customers, and the communities they serve. 

Blended debt funds are an ideal approach to advancing financing in this sector for two reasons:

__1. It attracts diverse investors:__ Sustainable energy in emerging markets reaches diverse impact areas (e.g., from energy poverty, climate change, health, education, to food security). The projects that we finance have impacted all those different areas, attracting various investors–particularly impact investors–from donors and foundations, to private impact investors who are commercially oriented and development finance institutions (DFIs).
__2. It allows for scalable financing:__ By taking a junior position and offering first-loss protection, public and philanthropic funders can de-risk transactions for commercially mandated investors, effectively mobilizing greater volumes of capital into solar financing. 

 

## How has COVID-19 impacted the sector, and how has SunFunder navigated these uncertain times?
 

Across the solar companies we support, the impact has varied based on the maturity of each business. Every company has been significantly impacted. What we have observed is that larger, more established and better capitalized players have on average performed better than we expected and managed to continue operations where possible. The smaller, early-stage companies have really struggled, either because they lack a cash buffer or wide investor base, or because they are not diversified across multiple geographies to cushion the blow from regional economic shocks. For the sector to scale long-term, it is important that earlier-stage, locally owned solar companies emerge and advance. These are the companies most at risk of survival due to COVID-19. 

SunFunder has remained as active as ever in the sector throughout the pandemic. We had several sizable loans scheduled to close in late March through June 2020, and we continued to proceed using our risk tools from a couple of public institution partners to mitigate risk and navigate the uncertainty COVID-19 presents; one is a guarantee, the other is political risk insurance. With support from these risk tools, Q1 and Q2 have been our biggest and most successful in the company’s history. 
 

## Why are there so few debt providers in solar financing targeting developing countries, and what is needed to reach more solar borrowers and mobilize greater volumes of private capital? 
 

When it comes to local banks, a lot of them are not familiar with solar finance and the structures required to finance these types of projects. On top of that, they often have very challenging collateral requirements and move at an unfavorable pace. Donors are interested in the space but are not often a sustainable source of financing over time because they tend to gravitate towards what is new rather than what is proven. DFIs have been a crucial lender in the space, but sometimes have ticket sizes that exclude smaller players who need the greatest support. DFIs can also be relatively risk-averse which leaves out many solar companies from raising directly from them. Large international commercial investors, including those with newly established impact funds, find it difficult to invest in solar in Sub-Saharan Africa for a host of reasons, some including: (i) they lack local teams and experience in those markets, (ii) ticket sizes are too small, and (iii) the risk-return profile is weak in their assessment. 

Therefore, intermediaries play a vital role in the space. SunFunder was one of the first, but we are not the only one. We are thrilled to see financial intermediaries emerge in the solar financing space that bring with them experience in the microfinance sector and have developed strong co-lending relationships with some of them including Convergence member, responsAbility, and Oikocredit and Global Partnerships. Together, we are scaling finance in the space. We are aggregating smaller loans with various risk mitigating tools and approaches like first-loss capital and guarantees to present private investors with transactions that meet their scale requirements for their ticket size and return, while offering them local expertise they lack in-house. 
 

## It is not always easy to attribute impact to blended finance. How does SunFunder make this connection? 
 

At SunFunder, we focus on the two major areas: energy poverty and climate change. We measure the number of people that have improved access to energy through the loans that we make and the number of tonnes of greenhouse gas (CO2) emissions avoided because of our loans. We do this on a project-by-project basis and aggregate that data. To date, SunFunder has helped 7 million people gain improved access to solar energy and prevent 700,000+ tons of CO2 emissions from entering the atmosphere annually. Everything we have done has been a result of a blended capital structure. It is clear to us that had we not adopted a blended finance approach, we would not have been able to raise funds or unlock the USD 150 million to advance solar financing. The impact we have had on climate and energy access as an organization through the loans we have made is a result of blended finance. 
 

## Can you provide any insights on how SunFunder integrates gender in its work? 
 

Our thinking about gender equality starts with our team and the way we operate. In addition to that, we look at our pipeline companies and how they work and approach hiring. Often, in emerging economies, women come across white-collar employment opportunities for the first time through solar companies like the ones we lend to. We know solar companies are playing a critical role to empower women in developing countries. The broader impact of improved energy access and solar systems also disproportionately benefit women when we see change at the household level (e.g., replacing kerosine-based systems with solar systems, helping reduce indoor air pollution and better safety). There are some interesting studies that get into some of these benefits, including this report from [60decibels](https://60decibels.com/energy-report "60decibles | Energy Report") and these case studies from our borrower [PEG Africa](https://www.ace-taf.org/wp-content/uploads/2020/04/GESI-Handbook-2020041001.pdf "PEG Africa | Gender and Social Inclusion in Off-grid Solar: A handbook for Sub-Saharan Africa"). 

The truth is the data is more challenging, and this is a gap SunFunder is committed to address. We have begun to ask and answer “*How do we measure gender equality impact of the loans that we have made, and how do we report on that like we do on the number of people who have access to energy?*” We are still early on in this process. 

The U.S. International Development Finance Corporation ([DFC](https://www.convergence.finance/news-and-events/news/3iypwUnCmLfgcuhvc12wxQ/view "Convergence | DFC Member Spotlight")) invested in our most recent fund, the Solar Energy Transformation (SET) Fund, through [the 2X Challenge](https://www.dfc.gov/our-work/2x-womens-initiative "DFC | 2x Women's Initiative"), in an effort to catalyze additional private sector investment to advance women's economic empowerment. We know they, and other key investors in the fund such as Calvert Impact Capital, also a Convergence member, apply a gender lens in everything they do and have a rigorous process for evaluating investments that address gender equality.

 

## SunFunder works with investors including DFIs, impact investors, family offices, foundations, high net worth individuals and institutional investors. What are some trends across these various capital providers in accelerating solar financing and blended finance? 
 

It is hard to generalize since there is distinct activity unique to each group. 

Some investors require seniority with subordinate or “first-loss” capital from others to de-risk their senior investment, and others are more interested in playing a catalytic role and taking a first loss or subordinate position. When DFIs only opt to participate in a senior tranche, that presents a challenge for us and others using similar structures who are interested in scaling because there are very few scalable options available for the subordinate tranches. One trend we are seeing across DFIs is greater willingness to come in as a junior lender and truly play that catalytic role to mobilize additional private capital. This is an important trend that has helped us overcome a heavy roadblock in raising blended capital funds. We saw this with our most recent fund, the SET Fund, which is SunFunder’s third debt fund – a 9-year blended finance vehicle for distributed solar and storage investments in Africa and Asia. Through the SET Fund, we saw both private capital investors and DFIs take on junior debt exposure. Both DFC and Swedfund (Sweden’s DFI) invested in both the senior and junior tranches of the fund, which marked a huge step forward from our vantage point. Had they not done so our fund would have not been viable. 

One of the challenges we face in general is matching investors’ risk-return requirements. Donors and governments being willing to take concessional interest rates and/or a subordinate position has helped us provide commercially viable returns to commercial investors. The SET Fund currently has USD 10 million of senior debt available to reach its USD 70 million target size. We can now offer a high single-digit fixed returns to commercial investors in the fund’s senior tranche. 

Foundations are a mixed bag. Foundations can take more risk, and often are willing to take on subordinate capital exposure. However, one challenge is that once some foundations do something once, often their investment policy limits them being a repeat investor in the same sector or structure as they often prefer innovation over scaling. But when it comes to financing solar, it takes a lot of innovation early on to figure out the right business models and financing structures, and once that is figured out, the aim is to scale by replicating what is proven. This has made it hard to work with foundations in our SET fundraising, with notable exceptions; IKEA Foundation has been a great scalable partner for us. 
 

## What else would you like to share about SunFunder, its activities to date, and what is ahead to increase solar financing?
 

Our mission is to pioneer and scale financing for solar energy and storage in emerging markets and underserved communities around the world. Looking ahead, we aim to design scalable funds that really touch on those two specific aspects of our mission – pioneer and scale. Because they can conflict with one another when it comes to risk-return profile, SunFunder is creating distinct funds that speak to both imperatives, respectively. On the scale side, we are working to develop a large fund that will grow into hundreds of millions, and then billions, to address energy access and the climate crisis. At the same time, we are working with the donor community to design a catalytic pioneer fund to support early-stage locally owned and led businesses to cultivate long-term investible pipeline for the sector. 

*__Are you interested in becoming a member of Convergence's global network for blended finance? [Tell us you're interested.](https://www.convergence.finance/sign-up "Convergence | Member Sign-up") __*

Convergence recently spoke with Florian Meister, Managing Director at Finance in Motion to learn about the company's considerable growth in the field, and what advice they have for other asset managers interested in engaging in developing markets.

Member Spotlight with Florian Meister from Finance in Motion

Member Spotlight with Ryan Levinson from SunFunder

In 2019, Convergence awarded a design funding grant to the Global Development Incubator (GDI) to establish a financing facility that uses targeted incentives to increase lending from local financial institutions and international lenders to agricultural SMEs.

Today, we are thrilled to see Aceli Africa launch as a new market incentive facility designed to mobilize USD 700 million in lending to agricultural SMEs by 2025, by aligning capital supply and demand.

[Visit Aceli Africa](https://aceliafrica.org/ "Aceli Africa") to learn more. 

With initial design funding from Convergence, Aceli Africa launches as a new market incentive facility to mobilize lending to agricultural SMEs.

Aceli Africa Launches as New Market Incentive Facility

Aceli Africa Launches as New Market Incentive Facility for Agricultural SMEs

For nearly 30 years, [Stockholm International Water Institute](https://www.siwi.org/ "Stockholm International Water Institute") (SIWI) has led World Water Week. This year, the conference went virtual, with over 270 virtual sessions, bringing together over 4,000 participants from science, business, policy and civil society backgrounds, to discuss solutions to address the current climate crisis, in line with this years’ conference theme “water and climate.” 

Heading into the virtual conference this year, Convergence was eager to hear from climate and finance experts, in addition to the usual suspects in the water, sanitation and hygiene (WASH) sector. And, while we did notice the participation of some, by large, asset managers, institutional investors, and other private sector actors were absent. With little engagement from the private sector, it is no surprise ‘how to mobilize private finance’ emerged as a topic of conversation in multiple sessions. The good news is that this question arose often, and conversations around blended finance were prominent more this year. 

Here are some key takeaways relevant to blended finance:
 
## De-risking instruments can unlock commercial finance for WASH
 

In an [earlier blog](https://www.convergence.finance/news-and-events/news/5f0Hr8KJq0CygWACI60QMy/view "Convergence | Blended finance to make a splash at World Water Week"), we highlighted how blended finance can mobilize additional investment into water and sanitation projects by mitigating risks and enhancing project viability. At World Water Week, it was encouraging to her about several new initiatives including, [Water Access Acceleration Facility](http://www.incofin.com/danone-selects-incofin-im-as-its-partner-to-jointly-invest-in-businesses-providing-access-to-clean-water/ "Incofin | Water Access Acceleration Facility"), managed by IncoFin–in which Aqua for All will be partnering to deploy its philanthropic capital–and the [Social Impact Incentives for Water, Hygiene and Sanitation Program](https://www.roots-of-impact.org/wp-content/uploads/2020/08/SIINC-FOR-WASH-Leaflet.pdf "SIINC for WASH") (SIINC for WASH), launched by Roots of Impact and Aqua for All. Both are indicative of WASH actors moving towards making catalytic use of grant funding and concessional capital.

Several sessions also covered the role of technical assistance (TA) as a de-risking instrument. In Cambodia, for example, the French development agency AFD, the World Bank, and the EU collaborated with the Foreign Trade Bank of Cambodia (FTB) to extend commercial loans to small private water and electricity companies in rural and peri-urban areas. In addition to providing a guarantee and a concessional line of credit to FTB, AFD also provided grant funding to: (i) develop the capacity of FTB to assess water-related investment proposals, and (ii) support water operators in the development of sound business plans and investment studies. Participants learned that TA both for the financier and for its borrowers – that is, for both the supply and demand sides of the financing in this deal - was crucial to de-risk the investment.

![Image 2](//images.ctfassets.net/4cgqlwde6qy0/2dctPHCqnuWmhoeUqdvjYr/9b04de921e49b100d547cfcfb545f51d/Image_2.png)

 

## Aggregate investment opportunities for scale
 

Aggregation helps mitigate investment risk and create investment portfolios, increasing the investability of some smaller scale and/or higher risk projects. It is a key principle for private investors that are looking for investment opportunities at scale. [Take-a-Stake Fund](http://takeastakefund.org/ "Take-a-Stake Fund"), introduced in the session ‘Innovative Finance for Scaling Effective SDG 6 Solutions’, exemplifies aggregation. This new impact investment fund aims to invest in four sectors, from water purification systems to treatment of human waste, to public bath operators and laundry services. Take-a-Stake Fund will provide medium- to long-term capital (debt and equity) to small and growing businesses in the WASH sector. Besides capital, the fund also plans to provide TA to investees pre- and post-investment. The fund is being set up in a collaboration between the Dutch not-for-profit organization WASTE and the Swedish International Development Cooperation Agency (Sida), amongst others.

The [UPTIME consortium](https://www.uptimewater.org/ "UPTIME consortium") featured in another session also demonstrated aggregation for scale. In this case, five providers of rural drinking water services in Africa joined forces with Oxford University to develop a performance-based funding mechanism for water maintenance services in rural Africa. Pooling the performance data from these service providers, which work in different settings from Burkina Faso to Kenya, allowed the consortium to develop a standardized results-based contract design for funding rural water services at scale. On August 28th, Duncan McNicholl, Director of UPTIME, presented the second [Working Paper](https://static1.squarespace.com/static/5d5fc19961d87c00011689d2/t/5f1759127e30ed322cd5dba0/1595365662058/Results-Based+Contracts+for+Rural+Water+Services.pdf "UPTIME | Results-Based Contracts for Rural Water Services") during the session ‘Results-Based Contracts for Rural Water Services’ and announced plans to establish the ‘Uptime Catalyst Fund’ as a UK non-profit to pilot the proposed mechanism. Concepts like this could be game changing. 

 

## Simplicity and trust keep you agile
 

When designing development impact bonds and other results-based financing models, stakeholders spend a lot of time upfront determining the expected outcomes against which payments will be made. As a result of COVID-19, many pre-agreed results frameworks had to be revisited. In a session on the Cambodia Rural Sanitation Development Impact Bond (DIB)–the world’s first sanitation DIB–USAID, iDE and Stone Family Foundation shared their partnership experience, particularly in how they were able to adjust program activities to meet local needs and continue delivering impact as the pandemic progressed. This was made easier because iDE, the implementing agency, and Stone Family Foundation, the upfront capital provider, could agree upon the pivots that made the most sense given the situation on the ground. In turn, Stone Family Foundation communicated these changes to USAID, the outcome funder.

Two factors allowed for quick shifts in uncertain times. One was the simple structure of the DIB. This DIB design included only three partners, no special purpose vehicle, and no independent verifier of results. The second was trust among the three partners. Having cultivated a relationship, their collaboration thrived during an otherwise distressing economic period.

Blended finance structures are often very complex. This DIB proves that simplicity and trust allow for agile implementation under unforeseen circumstances.
 

## WASH practitioners are more interested in blended finance solutions
 

Lastly, we noticed that the number of attendees in finance-related sessions has steadily increased year after year. This is encouraging given WASH development practitioners are not the typical audience for private finance conversations. No doubt there is better awareness that increased private capital flows are imperative in closing the financing gap for water and sanitation. This week proved that more WASH actors identify blended finance as a helpful tool in attracting additional capital into the sector. It will take time for development practitioners to learn the language of asset managers and institutional investors and vice versa. To support this learning, we hope more private investors will take the floor in future World Water Weeks to advance the dialogue with WASH practitioners. 

*__Are you working on a blended finance transaction in water and sanitation? [Contact us](https://www.convergence.finance/contact "Convergence | Contact Us") to learn more about opportunities to gain visibility with funders and investors in the Convergence network, or check out our [Resource Library](https://www.convergence.finance/resource "Convergence | Resource Library") to learn about blended finance in the WASH sector.__*

Regina Rossmann from Convergence shares some key takeaways relevant to blended finance from World Water Week 2020.

Blended Finance Gets Increased Attention at World Water Week

Blended Finance Gets Increased Attention at World Water Week 2020

*Originally published on [The Africa Report](https://www.theafricareport.com/39877/how-blended-finance-can-accelerate-msme-growth-in-africa/ "How Blended Finance Can Accelerate MSME Growth in Africa")*

To meet the Sustainable Development Goals (SDGs) by 2030, approximately [USD 7 trillion](https://unctad.org/en/PublicationChapters/wir2014ch4_en.pdf "UNCTAD | Investing in the SDGs: An Action Plan for promoting private sector contributions") in private sector capital needs to be unlocked in developing countries. As policy makers grapple with the reality that trillions still need to be raised to bridge the gap, innovative finance is proving to be instrumental in offering asset owners and investors options to meet strong policy action with improved funding, especially for underserved sectors like micro, small and medium enterprises (MSMEs).

Globally, MSMEs play a crucial role in the economic development and social mobility of millions of people, through the provision of public goods and services, and creation of jobs. In Africa, MSMEs are estimated to contribute to [70% of the region’s total employment](https://medium.com/positive-returns/supporting-the-growth-of-msmes-across-africa-760642b7e07e "Supporting the Growth of MSMEs across Africa"). This number should balloon, given the rising population expected to enter the workforce in the next 10 years, but won’t if MSMEs cannot grow. Without adequate support to the MSME sector, unemployment, poverty, and other development challenges will worsen, ultimately delaying sustainable development and economic prosperity on the continent. 

According to [a study](https://www.ifc.org/wps/wcm/connect/03522e90-a13d-4a02-87cd-9ee9a297b311/121264-WP-PUBLIC-MSMEReportFINAL.pdf?MOD=AJPERES&CVID=m5SwAQA "IFC | MSME FINANCE GAP") by the International Finance Corporation (IFC), MSMEs face an astounding [finance gap](https://www.findevgateway.org/news/ifc-sme-finance-forum-target-solutions-africas-usd-331-billion-sme-finance-gap "IFC, SME Finance Forum Target Solutions to Africa’s USD 331 Billion SME Finance Gap") of over USD 331 billion in Africa. To meet the staggering gap in funding to support MSMEs in the region, there needs to be a greater adoption of innovative forms of financial structuring like blended finance to incentivize commercial investors to invest in MSMEs working towards a sustainable and prosperous Africa.

Blended finance is the use of catalytic capital from public or philanthropic sources to de-risk transactions and improve their risk-return profile allowing for increase private sector investment. According to [Convergence](https://www.convergence.finance/ "Convergence | Home"), the global network for blended finance, transactions targeting development projects in Africa have helped mobilize up to  USD 50 billion to date. Illustrative blended transactions tracked in Convergence’s Historical Deals Database include the Universal Green Energy Program by Deutsche Group, which has raised USD 302 million to increase access to clean energy in Sub-Saharan Africa, especially for rural populations, the Global Alliance for Vaccines and Immunizations (GAVI), which since 1999 has raised more than US$9.3 billion from both private and public investors, and the International Finance Facility for Immunization (IFFm), that has raised more than USD 5 billion from investors for immunization programming. It should be noted that 55% of the beneficiaries of such transactions are MSMEs. 

![Screen Shot 2020-08-31 at 11.21.45 AM](//images.ctfassets.net/4cgqlwde6qy0/2miOBXbUJbGhrRSkMOoOX/44bbd8481d1660a356b5b69d8015eae9/Screen_Shot_2020-08-31_at_11.21.45_AM.png)

As with other emerging regions, there is no doubt that real investment risks exist in Africa; such as political instability, informality of the market, and currency volatility. Yet, savvy investors looking for alpha are navigating these risks by instituting appropriate hedges within a blended capital structure. According to Convergence’s Historical Deals Database, specific to Africa based transactions, concessional capital from public and philanthropic sources is present in most blended finance transactions, followed by technical assistance, credit enhancement, and pre-investment stage grants.

The importance of blended finance approaches to facilitate investment into MSMEs is apparent in these deals. For instance, deploying capital to smallholder farmers presents many risks, which can be attributed to low productivity due to a reliance on rain-fed agriculture with limited alternatives for irrigation, the unavailability or unaffordability of inputs, such as improved seeds and fertilizer, as well as poor farming practices.  Against these challenges, the African Agriculture and Trade Investment Fund raised USD 170 million through a blended structure with concessional capital (in form of first loss capital) and a parallel technical assistance facility that helped to attract USD 106 million from private investors.

Similar structures are also present in the financial services sector. The African Local Currency Bond Fund is a USD 180 million fund that acts as an anchor investor and provides technical assistance to first time or innovative local currency bond issuances. The fund’s capital structure included credit enhancement in the form of a first loss tranche (representing 26% of the total fund size), and the fund further benefitted from a parallel technical assistance facility of USD 6 million. This blended fund plays an important role in local capital market development, while facilitating capital raises for local financial institutions and companies in the local bond market. It also points to the efficacy of blended finance in de-risking investments and mobilizing private capital that would otherwise not actively finance these types of transactions.

For African countries to improve access to finance for MSMEs, it is paramount to create investable opportunities using approaches such as those provided by blended finance. The results of such structures can reduce the funding gap to support African MSMEs, and, in turn, help realize a sustainable and prosperous future.


In this article, Pete Wamicwe, our Associate in Africa, shares how blended finance is creating investable opportunities to mobilize private sector capital and improve access to finance for MSMEs.

How Blended Finance Can Accelerate MSME Growth in Africa

*By: Joan Larrea and Annie Chen*

__Blended finance will be instrumental in advancing natural capital solutions to halt the climate crisis and can lead to bridging a USD 300 to 400 billion funding gap in conservation finance in Asia-Pacific.__

While the current global health pandemic demands innovation in medicine, it also urges us to act on learned lessons about our state of resilience and ability to thrive. We know we are deeply dependent on our natural habitats, and our survival as a species is irrevocably intertwined with that of the other living beings sharing our planet. It is indisputable that our economic and social resilience is tied to the health of our natural resources. Unlike our unpreparedness in facing the current pandemic, we already have what is needed to repair our environment. We have preventative and curative solutions to curb greenhouse gas emissions and reduce our vulnerability to the impacts of global warming. Investing in our natural capital, including water, land, soil, air, plant and animal species, forests, and minerals, can be achieved at scale. What is needed is greater private sector investment.

__Asia has proven to the world it can be a leader in crisis management; its policy makers and population can amass the resources and shared commitment to halt a global pandemic. However, compared to the outsized risks and population threatened by climate change in the region, the current pandemic is simply a wakeup call to act with greater urgency to protect the livelihoods and welfare of millions living across Asia-Pacific.__

Asia-Pacific contains [17 of the planet’s 36 biodiversity hotspots](https://development.asia/explainer/declining-natural-capital-high-stakes-asia-and-pacific "17 of the planet’s 36 biodiversity hotspots"), and [30% of the region’s wealth](http://www.teebweb.org/publication/mainstreaming-the-economics-of-nature-a-synthesis-of-the-approach-conclusions-and-recommendations-of-teeb/ "Mainstreaming the Economics of Nature: A Synthesis of the Approach, Conclusions and Recommendations of TEEB") (GDP, exports, government revenues, etc.) stems from natural capital. Unfortunately, years of unsustainable practices in infrastructure expansion, water extraction and land conversion in the region have led to the deterioration of land, freshwater, and marine ecosystems, worsening water and food insecurity, and increasing vulnerability to climate change. Without increased private sector intervention for conservation in the region, [over 3 billion](https://www.adb.org/news/asia-pacific-shows-progress-water-security-challenges-remain-adb "ADB | Asia Pacific Shows Progress in Water Security, But Challenges Remain") people will be living in water-stressed areas across the Asia– Pacific by 2050, placing added pressure on neighboring regions.

Where national governments are slow to allocate capital, innovative financing approaches like blended finance have proven instrumental in financing climate change mitigation and adaptation projects, creating commercially viable transactions that interest private investors. We’ve seen this at work in developed countries like the United States, with The Forest Resilience Bond developed by Blue Forest Conservation in California. This bond is a USD 4.6 million public-private partnership, with bridge financing from [two environmentally minded investment firms](https://www.wri.org/our-work/top-outcome/forest-resilience-bond-helps-reduce-wildfire-risk-california "World Resources Institute | Forest Resilience Bond Helps Reduce Wildfire Risk in California") for the rehabilitation of 15,000 acres of forest land in the Tahoe National Forest. This partnership is expected to reduce the risk of cataclysmic wildfires, while protecting water resources, averting carbon emissions, and creating rural jobs.

Convergence’s database–the most comprehensive database for blended finance transactions globally– has recorded [30 blended finance transactions](https://www.convergence.finance/news-and-events/news/4akfHG7NMBvgX6wluH5o93/view?utm_source=article&utm_medium=earnedmedia&utm_campaign=nc-oped-0420 "Convergence | Scaling blended finance solutions for conservation finance") focused on conservation in emerging markets, representing US$3.1 billion in aggregate financing. These have largely focused on sustainable agriculture and forestry, concentrated in the USD 50-250 million range with a median size of USD 87.5 million. But, the number of nature-based blended finance opportunities in emerging and frontier markets is improving. What we have seen is that working capital for those who are developing investible structures and visibility of an investible pipeline are essential to pull in private capital to turn these opportunities into real investment engines.

In Asia, Convergence’s [Design Funding Program](https://www.convergence.finance/design-funding "Convergence | Design Funding Program") awarded ADM Capital and ADM Capital Foundation a proof of concept grant to finalize the design of a [Tropical Landscapes Finance Facility](https://www.convergence.finance/resource/4tO5LULlfeb6QJroKuVHJ1/view?utm_source=article&utm_medium=earnedmedia&utm_campaign=nc-oped-0420 "TLFF Inaugural transaction: Corporate sustainability bond for natural rubber production") (TLFF) to deliver long-term financing for renewable energy and smallholder livelihood projects in Indonesia. In 2018, TLFF closed the first tranche of Asia's first corporate sustainability bond—a USD 95 million sustainability bond to finance sustainable natural rubber production in Indonesia across heavily degraded concession areas in the Jambi and East Kalimantan provinces, creating a [network impact](http://www.wealthandsociety.com/updates-and-articles/tropical-landscape-finance-facility-(tlff)-is-awarded-best-impact-finance-facility-in-indonesia-at-the-global-wealth-and-society-awards-indonesia-2019 "Tropical Landscape Finance Facility (TLFF) is awarded Best Impact Finance Facility in Indonesia at the Global Wealth and Society Awards Indonesia 2019") that has helped employ 16,000 people, rehabilitate land, and protect wildlife conservation areas.

Though investors have shown greater appetite for blended finance in developed countries, where government actors are more sophisticated and capital markets are relatively well-developed, the urgency to finance natural capital solutions in nascent markets must take greater priority. We cannot afford to sit idle as the natural ecosystem around us dives deeper into destruction. Even as the world looks to shut borders, we know that global warming knows no such boundaries. Our house is on fire.

As partners, our joint focus in Asia-Pacific is to continue raising the profile for blended finance, and boost deals in nature-based solutions for the region to preserve a rich portion of the world’s natural ecosystems. According to the [Convergence State of Blended Finance 2019 report](https://www.convergence.finance/resource/13VZmRUtiK96hqAvUPk4rt/view "Convergence | State of Blended Finance 2019 Report"), blended finance transactions targeting Asia – including both East Asia and the Pacific and South Asia – have increased to meet the rising demand. The Convergence database indicates the region has seen 127 transactions close, with an aggregate deal flow of approximately USD 23 billion.

In response to this growing interest, Convergence and the RS Group launched the [Asia Natural Capital Design Funding Window ](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window?utm_source=Natcap-oped&utm_medium=website&utm_campaign=NatCap-Sept15 "Convergence | Asia Natural Capital Design Funding Window")to accelerate the number of blended finance vehicles that go to market, structured to build a stronger investible pipeline for natural capital projects in Asia. Relative to all blended finance transactions, solutions for conservation have been nearly twice as likely to draw on design-stage grants, suggesting that such funding is instrumental for market acceleration.

Blended finance is critical in mobilizing private capital to advance global sustainability goals and can ensure institutional and commercial investors have a material impact on biodiversity. By no means is it a solution for the entire conservation financing gap, but it can address the funding gap in a significant way. The COVID pandemic has demonstrated the interconnectedness of our behavior, our health, the health of natural systems, and our economic future. In healing this gravely ill planet on which we depend for our wellbeing and survival, investors must likewise share the responsibility in its recovery.

*With funding from the RS Group, Convergence is currently welcoming applications for its Asia Natural Capital Design Funding Window until September 15 to provide grants for the design and launch of catalytic blended finance solutions focused on natural capital in Asia. [Learn more](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window?utm_source=Natcap-oped&utm_medium=website&utm_campaign=NatCap-Sept15 "Convergence | Asia Natural Capital Design Funding Window").*

Joan Larrea and Annie Chen present the benefits of blended finance and share how this innovative structuring approach can support the protection and preservation of the planet’s vital natural resources.

Solving Natural Capital Decline in Asia with Blended Finance

Solving the Natural Capital Decline in Asia with Blended Finance

[Finance in Motion](https://www.finance-in-motion.com/ "Finance in Motion") is a global impact asset manager that develops and advises impact investment funds that address social and environmental challenges. These funds use blended finance structures to bring together public and private capital to advance projects focused exclusively on sustainable development in low- and middle-income countries. Topics range from addressing climate change, strengthening biodiversity conservation, and fostering the sustainable use of natural resources, to improving livelihoods and promoting economic opportunities. In addition to their investment activities, the funds provide technical assistance (TA) to investees to build capacity and maximize impact.

Between 2009 and 2020, Finance in Motion has mobilized nearly EUR 5 billion across Southeast Europe, the Caucasus, Latin America, the Middle East, and North Africa. As they set course to expand into new regions with new financing products, we connected with Florian Meister, who became the company’s first Managing Director (MD) in 2009. Today he oversees Finance in Motion’s equity investments, project finance, investor relations and impact and sustainability management. 
 
## Can you share what Finance in Motion’s growth journey has been like since 2009, from the early days to where you are today; a global asset manager with more than EUR 2.3 billion of assets under management (AUM), having effectively mobilized nearly EUR 5 billion in low- and middle-income countries?
 

It all started in 2005 with the idea of creating a tiered fund structure that blends capital from the public sector, development finance institutions (DFIs), and private institutional investors. Eventually this idea contributed to the foundation of the microfinance vehicle [The European Fund for Southeast Europe](https://www.efse.lu/ "The European Fund for Southeast Europe") (EFSE), initiated by KfW Development Bank, which remains our largest fund. Founded in 2005 with USD 130 million in AUM, it doubled in size in 2006, allowing the fund to size up to over a billion in AUM today. This was a seminal moment, as EFSE’s growth allowed the team to maintain regional offices, which is a feature that continues to differentiate Finance in Motion from most other players in the field to this day – we now have 17 in-country offices worldwide to serve five impact funds, plus their corresponding sub-funds. The most recent of these funds was launched two years ago: This is the [Arbaro Fund](https://www.arbaro-advisors.com/ "Arbaro Fund"), with the European Investment Bank (EIB) as our anchor investor. Arbaro is a forestry fund that invests in sustainable forestry projects in Latin America, the Caribbean, and Sub-Saharan Africa. 

Operationally, we are in 30 countries with a workforce of over 250 people. So, it really has been a very good journey.
 
## What can you tell us about your approach using blended finance, and how it has evolved over the years? 
 
We have stuck very much to our initial product – this tranched fund approach where public sector institutions act as anchor investors who offer first-loss capital and may also bear the cost of market research, setting up the structure, and other critical launch activities. This is followed by DFIs in the mezzanine tranche, such as KfW, Dutch development bank FMO, International Finance Corporation, and EIB, all of whom are quite active in sponsoring our funds. Finally, the structure is topped with institutional investor capital, the most senior class. This approach coupled with being close to the market with regional offices and slowly expanding into new regions and new development areas has really defined our recipe for success. 

We have deviated slightly from this approach at certain times. The forestry fund is not a tranched structure; everyone is pari passu. This is an outcome of the fundraising process, where we conferred with investors on their preferences and adapted the product to align with their needs.

With regards to how our use of blended finance has evolved, we now use our original tranched funds to generate assets and share them out to offload mature assets into the private sector, which is a novel approach to blended finance. We are starting to offload a little bit with well-known relationship investors of ours. In a few weeks, we will be able to talk more about it, so stay tuned!
 

## Finance in Motion uses multiple types of blending across its various funds. What lessons can you share with other asset managers, that may be operating at a smaller scale, on how to consider different instruments and tranches?
 

Here is what has worked for us, and we encourage others to do: 

__Establish a diversely qualified workforce:__ Anyone wanting to get involved in blended finance must know that it is very complex, so it is important to assemble a good mix of professionals. For example, you will need those who know more about the assets, someone who knows more about investments, someone who knows more about the legalities around fund design, and other compliance professionals, and so on. Having various experts involved helps create strong, well-rounded structures that have the capacity to scale and yield development at scale. 

__Be patient:__ Launching a fund takes a while – do not expect the fund to launch in 6 months. Take steps to ensure there is enough of a reserve to help carry through to the closing of that fund. 

__Prioritize your anchor investor:__ If you are trying to mix funds in tranches like we do, this approach usually works best. Do not start with the senior investor; it is terrific to find a private individual or company that wants to do something good in Africa, but you must first have the foundation onto which that entity can invest. Find the first-loss investor first, and focus on cultivating that relationship, because it will take time to define your goals and iron out the details before advancing in the process together. 

__Build good governance:__ There always needs to be a serious level of monitoring involved when the public’s money is being used, because they are bearing a lot of risk and not likely getting the full return commensurate to the risk taken. At the same time, they are especially attentive to reputational risks. By ensuring good governance, you are making sure every actor is getting the best outcome possible. 

 

## How have you seen the blended finance market change in the last 5 years?
 

Our model of tranched funds is being replicated, and we are happy to see it. It is encouraging to see big creators of development funds like the DFIs drawn to this cost structure and use it again in tenders. But it is not the only thing that is going on. There are new actors coming in, sometimes surprising, with more agile structures, offering risk guarantees rather than giving capital. I see the [U.S. International Development Finance Corporation](https://www.convergence.finance/news-and-events/news/3iypwUnCmLfgcuhvc12wxQ/view "Convergence | DFC Member Spotlight") (DFC), another member of Convergence, now doing some creative things on guarantees, for example. And, private sector investors too are being bolder, coming in as anchor investors of a fund or second-loss investors rather than only looking at the senior tranche to invest. 

All these developments are promising because they bring capital to bear on difficult problems in places where it may not otherwise go in an unblended way. Once pension funds, for example, learn that they can be involved, let’s say through our private equity fund in the MENA region ([SANAD Fund](https://www.sanad.lu/ "SANAD Fund")), and see the money coming back with a 7% yield on it, maybe they will be inclined to be more courageous and go to the next structure with less intervention from the public sector. That kind of attitude is what blended finance and these sorts of new practices may encourage to allow for development at scale. 

 

## If possible, can you talk about how Finance in Motion has helped advance gender awareness, and integrated gender considerations in its investment decisions?
 

So here might be some good advice for other asset managers interested in blending capital. From the beginning, we have incorporated a TA facility, which is a separate pot of money for support beyond investments, with solid governance, to prepare markets, strengthen the possible investee, or prepare the investee for investment readiness. This has worked well for us, among others, in advancing gender awareness. Other initiatives to grow gender consciousness and equality outcomes includes the work we have through EFSE and Sanad.

Through the EFSE Development Facility, the Entrepreneurship Academy was launched to provide entrepreneurs, including specific programs for women entrepreneurs of MSMEs, with guidance, resources, mentoring and networking opportunities to advance their businesses. The SANAD Entrepreneurship Academy has offered a Womenpreneur tour, a joint initiative with the [Womenpreneur Organization](https://womenpreneur-initiative.com/ "Womenpreneur Organization") to facilitate investment in women and girls in the MENA region. In addition to these initiatives, we work with banks and other institutions that have a focus on gender, and we ask our TA partners to report gender disaggregated data.

EFSE and SANAD invest in some specific financial institutions that have a targeted approach to financing female business owners, and the longstanding relationship EFSE has with an MFI in Bosnia and Herzegovina also focuses on financing female business owners.
 

## In regions where there may be higher risk, real or perceived, what is needed to pull institutional investors and commercial capital into blended finance? 
 

First and foremost, it is important to have a good structure and good assets, or a strong ability to find them by being on the ground. From our perspective, having a strong track record also really helps. By now, we have been doing this work for nearly 15 years, and out of the 700 transactions we have lent, we have only ever written off half a million dollars, which encourages investors to continue to engage and be involved with future initiatives. 

You need to be able to demonstrate you can responsibly invest and offer a line of return, whether that is through your existing funds or your team.
 

## Recently, we have seen a lot of interest in the potential for blended finance to enable scaled opportunities and impact. Could you share your insights and advice based on your experience managing funds of a significant size?
 

The bigger the fund, the more impact you should have, and if you are not then you really need to examine what is going on. Also, the bigger the fund, likely, the more due diligence is needed. I would caution people who want to build larger funds against focusing solely on one country. That creates a tremendous amount of exposure to the volatility that may transpire in that one country, due to market downturns or political unrest or social conflict, which in turn worries investors. From the beginning, each of our funds has covered at least 10 countries, which has helped us reduce the risk profile of each of those funds. 

In most of our funds we have a performance bonus, and a third of that is usually measured by certain impact benchmarks. For more information on what we target and how we have tracked performance to date, one can look at this year’s [Impact Report](https://www.finance-in-motion.com/article/the-road-to-impact "Finance in Motion | Impact Report"), which is the 6th report on impact we have published, and at our [disclosure statement for Operating Principles for Impact Management](https://www.finance-in-motion.com/press/release-1/finance-in-motion-publishes-disclosure-statement-for-operating-principles-for-impact-management "Finance in Motion | Operating Principles for Impact Management"). 

 

## What can you tell us about what is ahead for Finance in Motion? 
 

The SANAD Fund for MSME has officially added Sub-Saharan Africa now that we have received shareholder approval. The fund will expand both its debt and equity operations and TA into the region to promote entrepreneurship, job creation, and access to finance for MSMEs. We might branch out further, perhaps with funds that are both private debt and publicly traded debt. We may also have a fund that invests in liquid assets. 
 

## Thinking about your time at Finance in Motion to date, what has stood out to you?
 

I think it is been great to see the firm grow and maintain a strong culture. Everyone is on the same page. Today, the markets are stressful for everyone, but the team continues to be united and working with clarity towards a common goal to promote growth, sustainability and equality. I am happy to be a part of a firm that helps move some of the excess liquidity from the western markets into developing countries towards social and climate issues with strong attention to gender outcomes and good governance. I am definitely looking forward to the work we are yet to do.

Building on __[how gender is integrated in blended finance](https://www.convergence.finance/news-and-events/news/3q7aGC3DBXf5KiRRDBErYO/view "Convergence | Assessing Gender Lens Investing in Blended Finance")__ and __[what tools can be used](https://www.convergence.finance/news-and-events/news/5ZdqmL7KE8pTaxMm2XgZJU/view "Convergence | What are current reports telling us about gender and blended finance?")__, we now ask, *__Who is applying a gender lens successfully? __*

With investors increasing their focus on gender lens investing, we recently explored which institutions and investors have most commonly participated in gender-related blended finance transactions to advance gender equality. To this end, we broke down the 127 transactions aligned with Sustainable Development Goal (SDG) 5 in our database ([24% of all transactions](https://www.convergence.finance/news-and-events/news/3q7aGC3DBXf5KiRRDBErYO/view "Convergence | Assessing Gender Lens Investing in Blended Finance")) into over 1,000 individual investments. Here, we share what we learned about the organizations deploying these grants, guarantees, debt and equity investments.

## Gender is cross-cutting, regardless of organization type 

 

The above pie chart indicates that gender lens investing has not been concentrated amongst one group of actors in blended finance. Public sector entities, including development finance institutions (DFIs), multilateral development banks (MDBs) and development agencies, are the most active in applying a gender lens to their blended finance transactions, accounting for 44% of financial commitments overall. However, private sector investors have also shown a healthy appetite for gender-related blended finance transactions, accounting for nearly 40% of financial commitments, with impact investors playing a particularly active role. Impact investors have accounted for half (50%) of private sector activity in gender-related blended finance transactions, making them more active in the gender space compared to their participation in the overall blended finance market (~37% of private sector activity.) 

__Which organizations are paving the way?__

![Top Organizations in Gender-Related Blended Transactions](//images.ctfassets.net/4cgqlwde6qy0/5OwZlxIWZnCiwGznB1MBRE/0f3c4e9a6da5b5c2a7e745690bc559ab/Picture2.png)

Of the top 10 investors in gender-related blended finance transactions, seven are MDBs or DFIs, including the Dutch entrepreneurial development bank FMO and the French development bank Proparco, and Convergence members, International Finance Corporation (IFC) and United States International Development Finance Corporation (DFC). It is no coincidence that these institutions are paving the way, given their commitment to the [2X Challenge](https://www.findevcanada.ca/en/news/two-new-investors-join-2x-challenge-initiative "2X Challenge"), which calls on the G7 and DFIs to mobilize USD 3 billion in [investments](https://www.2xchallenge.org/criteria "2X Challenge Criteria") focused on women’s economic empowerment. In October 2019, European Investment Bank (EIB), another Convergence member, followed and became the first multilateral development bank to endorse the 2X Criteria. 

IFC is the most active MDB in the blended finance market overall and has taken significant strides to address gender equality through its investment activities. One example is through the [IFC Women Entrepreneurs Finance Initiative](https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/solutions/products+and+services/blended-finance/we_fi_landingpage "IFC Women Entrepreneurs Finance Initiative") (IFC We-Fi). We-Fi uses blended finance to fill financing gaps in investments to enable women entrepreneurs to start and grow their own firms. In response to COVID-19, IFC’s Banking on Women business has pledged [USD 2.4 million](https://lionessmagazine.com/ifc-offers-incentives-for-lending-to-women-led-business/?utm_campaign=meetedgar&utm_medium=social&utm_source=meetedgar.com "IFC Offers Incentives For Lending To Women-Led Business") for performance-based initiatives to financial institutions that agree to earmark at least 20% of working-capital loan proceeds for female customers and women-led enterprises. These funds will be provided by the We-Fi, Global SME Finance Facility, and the Women Entrepreneurs Opportunity Facility–a partnership between IFC and the Goldman Sachs 10,000 Women initiative.

The United States Agency for International Development (USAID), another Convergence member, is the most active government aid agency in the gender-related blended finance space. Almost half (46%) of its overall commitments involved gender-related transactions. USAID has participated in 36 gender-related blended finance transactions, more than any other blended finance investor. Around 26% of these deals are concentrated in the agriculture sector. Examples include repeat investments in the [Small Enterprise Assistance Funds’](https://www.seaf.com/womens-economic-empowerment-and-gender-equality/ "SEAF | Women’s Economic Empowerment and Gender Equality") (SEAF) Peru and Colombia agribusiness funds. Other examples of gender-related deals in USAID’s portfolio include Women’s World Banking Capital Partners Fund II, which [achieved financial close at USD 75 million](https://www.convergence.finance/news-and-events/news/6V666kYoHBiRdUpbkmco50/view "Convergence | Women’s World Banking Capital Partners II Achieves Closing at $75M") in 2020. Here, USAID provided first-loss capital to catalyze commercial investors as well as technical assistance to advance the use of digital financial services for women. 

[The Green Climate Fund](https://www.greenclimate.fund/projects/gender#overview "The Green Climate Fund") (GCF) has funded 12 gender-related blended deals to date. It is [the first climate finance mechanism](https://www.greenclimate.fund/sites/default/files/document/guidelines-gcf-toolkit-mainstreaming-gender_0.pdf "GCF | Mainstreaming Gender in Green Climate Fund Projects") that mainstreams “gender perspectives from the outset of its operations as an essential decision-making element for the deployment of its resources.” The GCF guides the entities submitting funding proposals on the gender documentation they must incorporate at a project planning, preparation and development stage. In 2019, it published its Gender Analysis/Assessment and Gender and Social Inclusion Action Plan [Templates](https://www.greenclimate.fund/document/gender-assessment-and-action-plan-annex-8-funding-proposals "GCF | Gender assessment and action plan: Annex 8 to Funding Proposals").

Impact investors have most commonly supported gender-related blended finance transactions on commercial terms. Ceniarth LLC and Calvert Impact Capital, both Convergence members, have made the largest number of investments in gender-related blended finance transactions. Ceniarth founder, Diane Isenberg, is a [self-declared gender lens investor](https://ceniarthllc.com/ceniarths-diane-isenberg-i-am-a-gender-lens-investor/ "Ceniarth’s Diane Isenberg: ‘I am a gender-lens investor’"). Calvert Impact Capital has launched [Women Investing in Women](https://www.calvertimpactcapital.org/initiatives/gender "Women Investing in Women") (WIN-WIN) initiative, and demonstrated the strong relationship between gender diversity in leadership positions (senior management) and financial performance in an [analysis](https://www.calvertimpactcapital.org/insights/gender-report "Calvert Impact Capital | Gender Report") of its own private debt portfolio. Since 2019, it has been leading the [private debt strategy](https://www.calvertimpactcapital.org/press/releases/885-calvert-impact-capital-joins-innovative-collaborative-to-mobilize-1-billion-for-gender-equity#:~:text=%E2%80%9CThe%20Equality%20Fund%20strategy%20will,Pryce%2C%20Calvert%20Impact%20Capital's%20CEO.&text=Calvert%20Impact%20Capital%20invests%20to%20create%20a%20more%20equitable%20and%20sustainable%20world. "Calvert Impact Capital Joins Innovative Collaborative to Mobilize $1 Billion for Gender Equity") of the Equality Fund, a Canadian initiative that brings together investors, philanthropists and government to support gender equality outcomes globally. 

![Top impact investors in gender-related blended transactions](//images.ctfassets.net/4cgqlwde6qy0/6zopcXvvjQh8No2WHFEBpY/36c3cc9bfdad5c9fd279e47964565b6e/Picture3.png)

While commercial investors have accounted for 19% of gender-related investments in our blended finance database, we are yet to see sustained investment activity from this investor set. Nevertheless, Société Générale, Deutsche Bank, and Bank of America have all invested in multiple blended finance transactions with a focus on gender. We have also seen positive momentum along another important dimension of gender equality; diversity in the workplace. For example, all three commercial banks have signed up to the [Women in Finance Charter](https://www.fnlondon.com/articles/societe-generale-signs-up-to-women-in-finance-charter-20190221 "Societe Generale signs up to Women in Finance Charter"), joining 330 other firms in financial services that have committed to improving gender diversity amongst their staff in the UK. Internal organizational gender policies are not captured in our database but remain an important indicator of achieving gender equality outcomes. 

It’s important to keep in mind that mobilizing commercial investment for gender equality does not necessarily require blended finance. As [Project Sage 3.0](https://socialimpact.wharton.upenn.edu/research-reports/reports-2/project-sage-3/ "Project Sage 3.0: Tracking Venture Capital, Private Equity, and Private Debt with a Gender Lens") reports, the number of structured private equity, venture capital, and private debt vehicles that operate with a gender lens is growing significantly. Many of these transactions are not blended – they already yield good financial returns without the need to adjust the risk-return profile through blending. 

__Foundations and NGOs can do more__

Lastly, foundations and Non-Governmental Organizations (NGOs) are more active in gender-related blended finance transactions than in the overall blended finance market (17% vs. 12% overall.) 

![Top foundations/NGOs investing in gender-related blended transactions](//images.ctfassets.net/4cgqlwde6qy0/4Gpc7kLgHQLykWAmM4YrWP/e7d93ad7e3e0c766dadc33fc936dd1d0/Picture4.png)

A third of the Bill & Melinda Gates Foundation’s blended finance investments are gender-related, and the majority are direct investments. Examples include [Bridge International Academies](http://inclusiveventures.com/investments/bridge-international-academies/ "Bridge International Academies"), [Pro Mujer](https://www.gatesfoundation.org/How-We-Work/Quick-Links/Grants-Database/Grants/2006/03/OPP40315 "Pro Mujer"), [ProCredit Holding](https://www.gatesfoundation.org/How-We-Work/Quick-Links/Grants-Database/Grants/2006/11/OPP44865 "ProCredit Holding"), [Sanergy](https://www.gatesfoundation.org/Where-We-Work/Africa-Office/Sanergy "Sanergy"), and [ASA International](https://www.asa-international.com/about-us/our-history/ "ASA International"). Notably, the Foundation’s catalytic Strategic Investment Fund, which aims to attract private-sector capital for innovative companies aligned with development objectives, has funded [Root Capital](https://sif.gatesfoundation.org/investments/root-capital/ "Root Capital"), [M-Kopa Solar](https://sif.gatesfoundation.org/investments/m-kopa/ "M-Kopa Solar") and the [Implant Access Program](https://sif.gatesfoundation.org/news-and-updates/implant-access-program-expanding-family-planning-options-women/ "Implant Access Program"). More broadly, the Foundation has worked with its partners to develop an [empowerment model](https://docs.gatesfoundation.org/Documents/BMGF_EmpowermentModel.pdf "Bill & Melinda Gates | A Conceptual Model of WOMEN AND GIRLS’ EMPOWERMENT") that may help governments, organizations and individuals design women inclusive empowerment programs, and set up a dedicated web page to [women’s economic empowerment](https://www.gatesfoundation.org/equal-is-greater/ "THE BILL & MELINDA GATES FOUNDATION’S GLOBAL FRAMEWORK FOR ADVANCING WOMEN’S ECONOMIC EMPOWERMENT") and a [“Gender Equality Toolbox](https://www.gatesgenderequalitytoolbox.org/ "The Bill & Melinda Gates Foundation’s Gender Equality Toolbox")” to guide its staff and partners when conceptualizing gender intentional programs and investments. 

Similarly, 37% of the Shell Foundation’s investments in blended finance structures are gender-related, with a focus on supporting SMEs and clean energy. These investments include the GroFin funds (Africa, Small and Growing Businesses, and Nomou Jordan), Envirofit (clean energy), BBOXX (energy poverty) and M-Kopa Solar (solar energy). The Foundation also focuses on furthering [business objectives in tandem with generating opportunities for women](https://shellfoundation.org/app/uploads/2018/10/A-business-first-approach.pdf), by evaluating business challenges and [designing solutions with a gender lens](https://shellfoundation.org/app/uploads/2018/10/Gender-Programme-Learnings.pdf "Shell Foundation | Lessons Learned: Gender Inclusion Strategies for SMEs in the Off-Grid Energy Sector").



## This is just the beginning

 

Our analysis shows that gender is a cross-cutting theme – whether a development agency, an MDB or DFI, a foundation, an impact investor, or a commercial investor, gender is everyone’s domain. Moreover, there are many ways to integrate gender into operations and investment strategies. Some institutions tackle internal inequalities by reducing bias in hiring and promotion processes, as well as by increasing female representation in senior management. Others adopt gender lens investment strategies, moving capital to advance gender equality worldwide. Both processes are crucial to advance women’s empowerment and need to progress simultaneously. 

We expect more funders and investors – whether public or private – to strengthen their commitment to gender equality. This [evidentially yields both financial and social returns](https://www.nesst.org/nesst/2020/6/22/the-business-case-for-gender-lens-investing "The Business Case for Gender Lens Investing"). Gender inclusion enables companies to grow and retain talents, boards to improve their decision-making, and investors to transform local and global markets. Blended finance is one of many tools to advance gender objectives, and most gender lens investment strategies do not require blending. Yet, where donors and private sector actors want to push the boundaries - accelerate the introduction of new models or counteract unequal access to resources - blended finance can be useful. We will continue to demonstrate this and will keep a pulse on developments in gender lens investing within the blended finance market.


__For more of the latest research on blended finance, visit our [Resource Library](https://www.convergence.finance/resource "Convergence | Resource Library").__

*This blog post, contributed by Convergence Data & Research Intern, [Divya Jalan](https://www.linkedin.com/in/divyajalan/ "Divya Jalan | Data & Research Intern at Convergence"), is part of a new series that will look at gender in the blended finance market, including key opportunities and challenges for achieving, measuring, and bolstering gender equality in blended finance transactions. Blogs in this series include:*
- [Assessing Gender Lens Investing in Blended Finance](https://www.convergence.finance/news-and-events/news/3q7aGC3DBXf5KiRRDBErYO/view "Convergence | Assessing Gender Lens Investing in Blended Finance")
- [Advancing Gender Equality through the Indo-Pacific Design Funding Window](https://www.convergence.finance/news-and-events/news/1UKrPaHdFgV23AQBtghfUW/view "Convergence | Advancing Gender Equality through the Indo-Pacific Design Funding Window")
- [What are current reports telling us about gender and blended finance?](https://www.convergence.finance/news-and-events/news/5ZdqmL7KE8pTaxMm2XgZJU/view "What are current reports telling us about gender and blended finance?")

With investors increasing their focus on gender-lens investing, Convergence recently explored which institutions and investors have most commonly participated in gender-related blended finance transactions to advance gender equality.

The top investors in gender-related blended finance deals

Who are the top investors in gender-related  blended finance deals?



[https://convergence-finance-prod-public.s3.amazonaws.com/webinars/CEW+DF+Experience+V4-FINAL.mp4](https://convergence-finance-prod-public.s3.amazonaws.com/webinars/CEW+DF+Experience+V4-FINAL.mp4)

In 2018, Convergence awarded Clean Energy Works a design stage grant to design a blended solution using the PAYS® model for clean transport, to reduce diesel emissions and accelerate the electrification of transportation to advance __Sustainable Development Goal 7–Affordable & Clean Energy__. 

Earlier this year, Clean Energy Works completed their feasibility study in Lima, Peru, and published their [findings](https://drive.google.com/file/d/1h-iUx42pxtStbnLx8RRpN8Oy0GZi5T89/view "Clean Energy Works | Analysis of Bus Electrification in Lima using PAYS for Clean Transport") based on their initial project for transit buses. To learn more about their design funding experience, we recently connected with Clean Energy Work's Executive Director, Holmes Hummel and International Program Director, Margarita Parra, who walked us through their journey. 

*Convergence is committed to accelerate blended finance solutions designed to attract greater private capital and financing to meet the Sustainable Development Goals. Until September 15, Convergence is accepting applications for its [Asia Natural Capital Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window "Convergence | Asia Natural Capital Design Funding Window"), to provide grant funding for the design and launch of catalytic blended finance solutions focused on natural capital in Asia.*

Convergence connects with Clean Energy Works to learn about their design funding experience and the results from their feasibility study in Lima, Peru.

Clean Energy Works Shares Its Design Funding Experience

As blended finance is increasingly adopted as a tool amongst the development community to help realize the Sustainable Development Goals (SDGs), important questions are being raised regarding the need for increased transparency and availability of impact outcomes from blended finance structures. 

On July 16th, Convergence, The IMPACT Programme and the Organisation for Economic Co-operation and Development (OECD) co-hosted an online event on “Leveraging Blended Finance for Development Impact” for non-profits, non-governmental organizations (NGOs) and other civil society organizations, with support from the UK Department for International Development (DFID), to discuss the role of blended finance in driving development impact, alongside important policy developments in the field. Below are some of the key questions and perspectives: 


## 1. What impact does blended finance achieve, and how is it measured?

 

As Convergence has previously stated, blended finance creates impact, broadly, on two levels: i) the impact of development activities financed by a blended finance structure, and ii) the impact of deploying a blended finance approach. Key metrics to assess the latter include i) mobilization (e.g., amount of financing unlocked for the SDGs), ii) sustainability (e.g., reducing the share of concessional capital over time, iii) replication (e.g., demonstrating viability of new markets), and iv) financial additionality (e.g., providing new sources of financing where investments are not yet available). 

Based on Convergence’s [earlier analysis on leverage ratios](https://www.convergence.finance/news-and-events/news/32YlzPV7lKaCSuEwSoYAua/view "Convergence | New Data Brief: How much commercial capital does concessional capital leverage?"), blended finance funds or fund-like structures have attracted US $4 of commercial capital for every US $1 of concessional capital (i.e., priced below market rate). While understanding the effectiveness and efficiency of a blended finance approach are key, the first consideration is crucial, particularly for the donor community: 


## 2. When it comes to blended finance, who benefits, how, and when? 

 

While blended finance is not a panacea for achieving the SDGs, it can be used to support a broad range of development activities. [According to Convergence’s analysis](https://www.convergence.finance/resource/3XJibIsItUipKjcOlLfam0/view "Convergence | Data Brief: Measuring Impact in Blended Finance"), to date, blended finance has focused on financial inclusion (46% of transactions), small and medium-sized enterprise (SME) growth (44% of transactions), with other common objectives including clean energy, sustainable agriculture, and land-use. The most common direct beneficiaries have been entrepreneurs and SMEs (45% of transactions), while the majority (73%) of end-beneficiaries reflect the base of the pyramid (BOP) populations – the poorest socio-economic group. This suggests that blended finance is a reasonable approach in financing development projects reaching low-income and vulnerable populations. 

## Efforts to standardize impact and improve transparency of blended finance are underway

 

Currently, the lack of transparency in development impact outcomes can make it more challenging for some policymakers and development practitioners to fully endorse the use of blended finance. 

The good news is blended finance is gaining traction as an alternative financing approach to achieve development at scale, as is the focus to improve the impact measurement and transparency of these transactions. To this end, the OECD has been leading policy efforts in the blended finance market. 

First, the OECD is currently preparing its Development Assistance Committee (DAC) Blended Finance Principles Guidance Notes, which provide practical guidance on implementing the [OECD DAC Blended Finance Principles](https://www.convergence.finance/resource/2znGyIv7YMQyUQ2oCWQOUI/view "OECD DAC Blended Finance Principles for Unlocking Commercial Finance for the SDGs"). Adopted in 2017, the OECD DAC Blended Finance Principles a policy tool for all providers of development finance - donor governments, development co-operation agencies, philanthropies and other concerned stakeholders. The OCED DAC Blended Finance provide a five-point checklist to ensure blended finance meets accepted standards and achieves impact promoted by DAC members, including Principle 5 “Monitor blended finance for transparency and results.” The guidance notes build on extensive consultations with donors, Development Finance Institutions, private investors, partner countries, and the DAC-CSO Reference Group, and is an important step in moving from principles to practice. 

In addition, the OECD is also leading efforts to support greater transparency and impact measurement in blended finance through the [Tri Hita Karana (THK) Roadmap on Blended Finance](https://www.oecd.org/dac/financing-sustainable-development/development-finance-topics/tri-hita-karana-roadmap-for-blended-finance.htm "Tri Hita Karana Roadmap for Blended Finance"). The THK seeks to foster a common language and collective action to deliver financing to support the SDGs, and is composed of five actions areas, including i) promoting transparency (see draft report by Transparency Working Group [here](https://www.convergence.finance/resource/4TdOQkT6IMnVvf9wqZFNV/view "Convergence | Report on THK Roadmap on Blended Finance: Promoting Transparency in Blended Finance")), and ii) impact (see report on Assessing Impact for the Poor by Impact Working Group [here](https://www.convergence.finance/resource/2aJpvJCc7Q5SubVL1lhQhX/view "Convergence | THK Roadmap for Blended Finance: A Checklist for Assessing the Impact of Blended Finance on the Poor")). To read more on the THK Agenda and its specific action areas, please visit the [THK Knowledge Hub](https://www.convergence.finance/resource "Convergence | Resource Library"), hosted by Convergence, with support from the Swedish International Development Cooperation Agency (Sida). 

Lastly, the OECD also shared updates on its current work on the Impact Standards for Financing Sustainable Development (referred to as IS-FSD), a set of standards for impact management to help public donors keep a high level of accountability on development impact when working through development finance institutions and private fund managers. The standards are currently undergoing a consultation process, and the latest version will be presented to the DAC In September.


## Blended finance can be a tool for humanitarian action

 

With guest Juan Luis Coderque Galligo, Head of New Finance Models (NFM) and Innovative Finance at the International Committee of the Red Cross (ICRC), participants learned how this international humanitarian aid organization is exploring new financing models to complement traditional sources of financing for humanitarian action, recognizing the growing gap between the landscape of need and available funding. 

In 2017, the ICRC created the [world’s first HIB](https://www.icrc.org/en/document/worlds-first-humanitarian-impact-bond-launched-transform-financing-aid-conflict-hit "The world’s first “Humanitarian Impact Bond” launched to transform financing of aid in conflict-hit countries") (“humanitarian impact bond”), which raises funds to build and run three new physical rehabilitation centre in conflict and post-conflict countries, namely Nigeria, Mali and the Democratic Republic of Congo. The ICRC has raised CHF (Swiss Franc) 26 million in upfront funding from impact investors, including New Re (part of Munich Re Group), who will be reimbursed by outcome funders, including the governments of Belgium, Switzerland, Italy, the UK, and La Caixa Foundation, following the achievement of agreed results. 

The ICRC is currently working on other financing projects, including a public-private infrastructure project in Goma, to implement and design a water-supply project. The ICRC aims to generate at least 5% of its income from NFM by 2030.

__To read more about impact in blended finance, please visit our [Resource Library](https://www.convergence.finance/resource "Convergence | Resource Library"). For more information on upcoming events and virtual trainings, contact us at comms@convergence.finance. __

In July, Convergence and partners co-hosted a webinar on “Leveraging Blended Finance for Development Impact” for non-profits, NGOs and other CSOs with support from DFID to discuss the role of blended finance in driving development impact.

Leveraging Blended Finance for Development Impact Highlights

Highlights from Leveraging Blended Finance for Development Impact Webinar

Convergence was recently selected to support the UN Joint SDG Fund as an independent evaluator and advisor to advance over 150 proposed SDG Financing interventions put forth by representatives from over 100 UN Country Teams, in conjunction with relevant UN agencies. 

Over the last few months, Convergence has worked with the UN Joint SDG Fund in operationalizing the [Call on SDG Financing Component 2: Catalyzing Strategic Investments](https://www.jointsdgfund.org/sdg-financing "Call on SDG Financing Component 2: Catalyzing Strategic Investments") to identify the highest potential proposals for investment. Through this initiative, the Joint SDG Fund will provide funding to support the development of solutions that facilitate public and private investments towards the 2030 SDG Agenda and its 17 goals. 

The partnership with the Joint SDG Fund in catalyzing SDG financing forms part of Convergence’s broader market acceleration strategy. Convergence has identified that there is currently an insufficient amount of support available for teams developing, and taking to market, investment products aligned to the SDGs. We see our role in helping the Joint SDG Fund select and fund investible solutions led by UN Country Teams as one way to accelerate additional capital from the public and private sector into sustainable finance. Convergence’s [Design Funding Program](https://www.convergence.finance/design-funding "Convergence | Design Funding Program") offers another unique market acceleration opportunity for practitioners to secure feasibility study and proof of concept stage design funding to develop and launch catalytic blended finance vehicles that aim to attract private capital to sustainable development at scale.

As the global network for blended finance, we are happy to provide our expertise and knowledge to the Joint SDG Fund, and look forward to sharing more details as this partnership progresses. The Joint SDG Fund will soon announce the results of the selection of shortlisted proposals for Component 2: Catalyzing Strategic Investments. In the meantime, [learn more](https://www.jointsdgfund.org/sdg-financing "UN Joint SDG Fund") about the UN’s Joint SDG Fund’s recently announced USD 60 million grant for Component 1: Reinforcing the SDG Financing Architecture.

Convergence supports the UN Joint SDG Fund to Catalyze SDG Financing

Convergence supports UN Joint SDG Fund

At Convergence, we keep our pulse on new literature to add to our [Resource Library](https://www.convergence.finance/resource "Convergence | Resource Library"). Over the past 2 months, we have seen many new reports on gender and blended finance. Here, we are sharing our takeaways from the new research, and our perspective on what it means for blended finance:

## #1 There is progress towards industry standards for gender-related impact measurement 

 

Previously, Convergence shared why [impact measurement](https://www.convergence.finance/news-and-events/news/LM3hOb8pHaWX05oNGjPVu/view) in blended finance can be challenging. Measuring and monitoring the impact of investments on gender quality and women’s economic empowerment is an even trickier affair. The newly published Gender Equality Scorecard© Manual and the 2XChallenge Indicator Guidance Note underscore the ongoing effort to harmonize different metrics. 

__Gender Equality Scorecard© Manual__

Developed by the Small Enterprise Assistance Funds (SEAF), the [Gender Equality Scorecard©](https://www.convergence.finance/resource/1txrBxMyIPDhSEWgoSBdVT/view "Gender Equality Scorecard©") (GES©) focuses on integrating a gender-lens in growth-oriented small and medium-sized enterprises (SMEs). The GES© provides an overall rating score for a company based on six gender equality performance vectors: 
1. pay equity 
2. women’s workforce participation
3. gender diverse leadership and governance
4. benefits and professional development
5. safe and healthy workplace environment, and 
6. women-powered value chains. 

The score for each of these six vectors is produced through the evaluation of four distinct parameters. The newly released [GES© Manual](https://www.convergence.finance/resource/7ye261vY9L4rC37bsASX1z/view "GES© Manual") describes how to score each gender equality vector consistently, and aligns the GES© indicators with the widely used [IRIS+](https://iris.thegiin.org/metrics/ "The GIIN| IRIS Metrics") gender impact metrics. 

Given that small and medium-sized enterprise (SME) finance is a frequent sub-sector for blended finance transactions, accounting for 25% of all transactions in financial services – in fact SEAF itself has a long history of using blended finance in its operations – the GES© Manual could be a useful resource for many in the blended finance community. 

__2X Challenge Indicator Guidance Note__

The newly released guidance note, “[How to measure the gender impact of investments](https://www.convergence.finance/resource/3LnbRNNKGrs8uw0VaBKLyr/view "How to measure the gender impact of investments"),” also showcases the ongoing coordination efforts in the gender lens investing field. Jointly published by CDC (UK's development finance institution), the GIIN and the 2X Challenge, it gives detailed guidance on the application of the 2X Challenge indicators to various investment activities, including to financial institutions and funds. 

To understand how investors can apply 2X Challenge indicators to different investment activities, imagine a Development Finance Institution (DFI) that lends to a financial intermediary which, in turn, lends to SMEs. In this case, the DFI may struggle to identify at what level to apply gender indicators–should the focus be on the financial intermediary, the SME itself, or both? As the guidance note highlights, the 2X Challenge indicators apply differently to financial institutions depending on the type of investment product provided, and whether this involves directed lending to financial intermediaries with a defined use of proceeds. For example, for equity or debt investments involving non-directed lending (e.g. tier 2 or senior debt), the DFI should apply 2X Challenge indicators 1-4 as follows:

Figure 2: 2X Challenge indicators applied to non-directed lending to a financial institution (FI)

![Picture1](//images.ctfassets.net/4cgqlwde6qy0/fOpjpglUBaXrWPHn2uTbv/077811a666c9c1a748e7abc53266b3f0/Picture1.png)


Source: CDC, the GIIN, and the 2X Challenge (2020) “How to measure the gender impact of investments”
 

 

Although the blended finance market remains far from gender mainstreaming, these are noteworthy strides towards standardized impact metrics and higher quality gender-related impact data.

## #2 Gender risks are inherent in infrastructure projects

 

Criterion Institute’s [new paper](https://www.convergence.finance/resource/3ZAgSVJb1pVm1PbgTMorfC/view "Gender as Material to Infrastructure Projects: Reaching Better Outcomes by Applying a Gender Lens from Project Inception") “Gender as Material to Infrastructure Projects: Reaching Better Outcomes by Applying a Gender Lens from Project Inception” analyzes gender-related risks throughout an infrastructure project’s lifecycle. Like every sector of the economy, infrastructure can have broad implications for advancing progress or entrenching gender concerns. The authors argue for incorporating a gender lens at the earliest stage of project inception and design to reduce risk across the project lifecycle. They further argue that the current discussion on incorporating a gender lens in infrastructure needs to move beyond: 
1. minimum compliance standards and a ‘do no harm’ approach to the intentional creation of a positive impact on women and girls; and 
2. the focus on efficiency when considering a gender lens in infrastructure to the recognition of gender equality and women’s empowerment as goals in and of themselves.

The paper touches on the opportunity for blended finance to advance this agenda. Blended finance transactions involve impact-driven organizations (e.g. public agencies, philanthropic foundations, impact investors, etc.) These often bring up considerations of gender-related risks and opportunities to other investors, which can eventually lead more investors to adopt a gender lens from the earliest stage of project development. 

## #3	It’s time to sharpen the gender lens to consider LGBTQI individuals

 

In an [earlier blog post](https://www.convergence.finance/news-and-events/news/3q7aGC3DBXf5KiRRDBErYO/view "Convergence | Assessing Gender Lens Investing in Blended Finance"), we acknowledged the need to move beyond the gender binary. A new report by Criterion Institute, supported by Dreilinden gGmbH, argues that investment can be a tool to address inequities faced by lesbian, gay, bisexual, transgender, queer, and intersex (LGBTQI) individuals. “[Investing with an LGBTQI lens: Rethinking Gender Analysis Across Investment Fields](https://www.convergence.finance/resource/76LKQgvu9fWYgHAFLR8KnC/view "Investing with an LGBTQI lens - Rethinking Gender Analysis Across Investing Fields")” outlines how to engage with managers and advisors to shape their practices and shift power dynamics in the transaction structure and terms. It points out that asset owners have the privilege of defining the terms on which they will move capital, and that “Investors have the power to embed an LGBTQI lens within terms, structures, and agreements to meet these individuals’ specific needs.” 
The report further notes that adding questions about diversity, equity, and inclusion into due diligence processes “not only removes biases from the investment process and helps to unearth hidden opportunities, but also signals to existing and potential portfolio companies that these issues are important to asset holders.” Although the market for non-binary investment strategies is still nascent, this report will contribute to its growth. 

## #4	Gender lens investing is on the rise

 

“[Project Sage 3.0](https://socialimpact.wharton.upenn.edu/research-reports/reports-2/project-sage-3/?utm_source=ImpactAlpha&utm_campaign=0c3ca2d084-EMAIL_CAMPAIGN_2019_08_20_12_35_COPY_01&utm_medium=email&utm_term=0_57980c6bda-0c3ca2d084-105978721&mc_cid=0c3ca2d084&mc_eid=19bcc9d316 "Project Sage 3.0"),” which the Wharton Social Impact Initiative and Catalyst at Large published in July, reveals that the market for gender-lens funds is growing rapidly. The report outlines the current activity of private equity, venture capital, and private debt vehicles operating with a gender lens. It finds that the total capital raise (among the firms that permitted the research team to publish the amount raised) was approximately USD 4.8 billion. This figure is more than double from the USD 2.2 billion figured they reported in 2019. The vehicles listed in the report include many blended finance transactions such as the Capital 4 Development Asia Fund, Women’s World Banking, SME.NG, RENEW, GroFin, Global Partnerships, Educate Global, and Ilu Women’s Empowerment Fund.

While this global summary is tremendously helpful, regional landscape reports provide more granular information. For example, the Sasakawa Peace Foundation, Catalyst at Large & SAGANA recently released [Gender Lens Investing Landscape – East and Southeast Asia](https://www.spf.org/en/gender/publications/gliasialandscape.html?utm_source=Gender-Smart+Email+List&utm_campaign=a849e9123c-EMAIL_CAMPAIGN_2020_05_10_01_18_COPY_01&utm_medium=email&utm_term=0_3d5bc23cf2-a849e9123c-201070304 "Report | Gender Lens Investing Landscape – East and Southeast Asia"). It highlights the important role of de-risking mechanisms – both for shifting perceived and real risks – and features blended finance transactions such as the [Japan ASEAN Women Empowerment Fund (JAWEF)](https://www.convergence.finance/resource/5AR5njuJR45khZMkblhjOa/view "Convergence | JAWEF Case Study"), and the Women’s Livelihood Bond 2.

__For more of the latest research on blended finance, visit our [Resource Library](https://www.convergence.finance/resource "Convergence | Resource Library").__

*This blog post, contributed by [Regina Rossmann](https://www.convergence.finance/about/team/2N51act2guAEEIJeAtzFFD "Convergence | Regina Rossman"), is part of a new series that will look at gender in the blended finance market, including key opportunities and challenges for achieving, measuring, and bolstering gender equality in blended finance transactions. Blogs in this series include:*
- [Assessing Gender Lens Investing in Blended Finance](https://www.convergence.finance/news-and-events/news/3q7aGC3DBXf5KiRRDBErYO/view "Convergence | Assessing Gender Lens Investing in Blended Finance")
- [Advancing Gender Equality through the Indo-Pacific Design Funding Window](https://www.convergence.finance/news-and-events/news/1UKrPaHdFgV23AQBtghfUW/view "Convergence | Advancing Gender Equality through the Indo-Pacific Design Funding Window")

Over the past two months, we have seen many new reports on gender and blended finance. Here, we are sharing our takeaways from the new research, and our perspective on what it means for blended finance.