Convergence Eventbrite

## Description
Sub-Saharan Africa is the region most frequently targeted by blended finance transactions, according to our data 35% of blended finance deals have historically targeted the region. For the impact of blended finance in the region to reach its full potential, there needs to be a robust ecosystem of sophisticated homegrown blended finance practitioners. To support this objective, Convergence is offering a blended finance training in Nairobi to help regional practitioners develop a strong understanding of both the theory and practice behind this collaborative approach.

As the global network for blended finance, Convergence has unique insights on public, private, and philanthropic players that participate in blended finance transactions and the various factors that unlock their participation. In designing this training program, we have leveraged our experience, data, and network to create a practical and actionable blended finance training curriculum.

## Program Structure

The one-day interactive training will include presentations, lectures, group exercises and case studies by Convergence and third-party facilitators. 
The curriculum will address questions like:

- What is blended finance and how can it be applied strategically?
- What does the blended finance ecosystem look like? Who are the players and how do they engage? 
- What are the key components of a blended finance transaction?
- What financial instruments are commonly observed in blended finance structures?
- How can development capital providers and private investors work together to create financial strucutures that reflect each other’s unique criteria and constraints?
- What are some of the blended finance innovations that have been designed to reduce currency risk for investors and borrowers?
- What needs to be done to mobilize local/domestic institutional capital and asset managers to participate in blended finance transactions?
- What are concrete examples of blended finance transactions that have successfully mobilized private capital that can achieve scale and contribute towards the SDGs? 



## Who should attend?
This training has been created for program and operational staff at commercial investment firms, development agencies, impact investing organizations, philanthropic foundations, and development finance institutions/multi-lateral development banks. Past participants have included individuals from organization such as Credit Suisse, the MacArthur Foundation, Global Affairs Canada, TDB Group, the Development Bank of Southern Africa, the African Development Bank, USAID, the World Wildlife Federation, the International Finance Corporation, the Australian Department of Foreign Affairs and Trade, the European Investment Bank amongst others.

The training will provide participants with an intermediate understanding of blended finance. It is recommended that participants already have a basic knowledge of the topic. Following the training, participants will be able to make sense of and implement blended finance transactions and frameworks within their respective organizations. 

## Information & Registration
Cost of attendance is $750 per person for members, and $1000 per person for non-members. Complimentary seat(s) are available for Convergence members who have registered for an annual membership. The training has limited space to ensure a personal, intensive and practice-driven learning experience. Please contact aakif.merchant@convergence.finance to register or if you require any additional information.

Can't make it to Nairobi? Stay tuned as we continue to add more trainings in other geographies throughout the year.

## Time & location

February 26, 2020 from 8:00AM - 6:00PM, at the Hotel Villa Rosa Kempinski, Chiromo Road, Nairobi, Kenya


Convergence Blended Finance Training - Nairobi, Kenya

Convergence Blended Finance Training - Nairobi

Convergence's [Design Funding](https://www.convergence.finance/design-funding) program supports the design and launch of new blended finance vehicles that aim to catalyze private investment in developing countries and towards the Sustainable Development Goals. 

In this information session, our Design Funding Manager Adhiti Gupta will provide a short presentation on the Design Funding program, with a focus on our two open windows: the Asia Natural Capital Window and the Indo-Pacific Window. This will be followed by a short interview on FAQs with our Head of Communications Sijia Yi and approximately 30 minutes for questions from participants. 

This session is targeted to anyone who is interested in applying for a grant from our Design Funding program.

The session will take place on __January 14th from 10:00-11:00 AM ET__

Convergence's Design Funding program: Everything you need to know to apply

Convergence Design Funding Webinar Jan 2020 v3

This session is targeted to anyone who is interested in applying for a grant from our Design Funding program.

Applying to Convergence's Design Funding program

Convergence's [Design Funding](https://www.convergence.finance/design-funding) program supports the design and launch of new blended finance vehicles that aim to catalyze private investment in developing countries and towards the Sustainable Development Goals. 

In this information session, our Design Funding Manager Adhiti Gupta will provide a short presentation on the Design Funding program, with a focus on our two open windows: the Asia Natural Capital Window and the Indo-Pacific Window. This will be followed by a short interview on FAQs with our Head of Communications Sijia Yi and approximately 30 minutes for questions from participants. 

This session is targeted to anyone who is interested in applying for a grant from our Design Funding program.

The session will take place on __January 13th from 8:00-9:00 PM ET/ January 14th 9:00-10:00 AM SGT__ (for those in the Asia-Pacific).

Convergence's Design Funding program: Everything you need to know to apply 

impact investment summit

The Summit includes a community of 350 impact makers who come together to connect, catalyse and accelerate the ecosystem. Past speakers include Jed Emerson, BrianTrelstad, Wayne Silby, Megan Starr, Joy Anderson, Jyoti Aggarwala, Abigail Noble, Amit Bouri, Stephanie Cohn Rupp, David Batstone, Beau Seil, and tens of other international luminaries in the impact investing space.

Our CEO Joan Larrea and Design Funding Manager Adhiti Gupta will be at the summit. 

Joan will be speaking on Nov. 13 from 12:00 - 1:00PM, on the panel: __Outsized Impact: Boosting Catalytic Capital to Grow the Market__

Adhiti will be speaking on Nov. 14 from 2:15 - 4:15PM, on the panel: __DEEP DIVE - Investing at Scale in South East Asia: Women, Girls, Influence and Capital
__

See the full program [here](http://www.impactinvestmentsummit.com/program).

Impact Investment Summit 2019

This fall on September 24th we are [launching](https://www.convergence.finance/news-and-events/events/5urXmjrQcNJUMM8NV3Kyjp/view) the 3rd edition of our keystone report: The State of Blended Finance 2019. The State of Blended Finance 2019 provides an updated analysis of the blended finance market based on Convergence’s continuous data and intelligence collection efforts as well as input from our partners and members.

This report builds on our previous reports from [2017](https://www.convergence.finance/resource/1qdtFkf5Fq86S4u8U4G8YU/view) and [2018](https://www.convergence.finance/resource/7LEqTu0YeceaQugSWaSKSk/view).

This webinar will review the report's findings, including impact, blending approaches, sectors, and regions. The webinar will also highlight emerging trends and themes as well as reflect on progress towards ‘better blending’.

Webinar: The State of Blended Finance 2019

This webinar will review findings from the State of Blended finance 2019, including impact, blending approaches, sectors, and regions. The webinar will also highlight emerging trends and themes as well as reflect on progress towards ‘better blending’.

The official Africa launch of our 2019 State of Blended Finance Report will be in Nairobi, Kenya on Thursday, October 3, 2019. 

The 2019 State of Blended Finance Report uses Convergence data to analyze the global blended finance market, including the most active funders and investors, sectors attracting the most financing, as well as the commonly utilized blending approaches.

__Agenda:__

9:00 a.m. Welcome and Opening Remarks

9:15 a.m. Keynote Address 

9:30 a.m. Report Highlights

9:45 a.m. Official Africa launch

10:00 a.m. Refreshments

10:30 a.m. Lecture on Blended Finance with Strathmore Business School

12:30 p.m. - 1:00 p.m. Light Lunch

*
Kindly RSVP no later than September 27, 2019 to reserve a place. Limited spaces available.*




State of Blended Finance 2019 Africa Launch

The official Africa launch of Convergence's annual keystone report, the State of Blended Finance 2019.

For blended finance to make a material difference towards the Sustainable Development Goals, diverse stakeholders such as commercial investors, development agencies, impact investors, philanthropic foundations, and development finance institutions, must develop a strong understanding of both the theory and practice behind this collaborative approach. 

As the global network for blended finance, Convergence has unique insights on each stakeholder and the various factors that unlock their participation. In designing this training program, we have leveraged our experience, data, and network to create a practical and actionable blended finance training curriculum.

## Program Structure

The one-day training will include presentations, lectures and case studies by Convergence and third-party facilitators. The training will be interactive and directly engage and involve participants in the learning process.

The modules and agenda are designed to enable participants to uncover answers to the following questions:

- What is blended finance and how can it be applied strategically?
- What does the blended finance ecosystem look like? Who are the various participants and what is their level of activity?
- What are the key components of a blended finance transaction?
- What are the various financial instruments that are commonly observed in blended finance structures?
- How can development capital providers and private investors work together in order to create financial transactions that reflect each other’s criteria?
- What are some instructive examples of transactions that have successfully adopted this approach to crowd-in private capital for development?

## Who should attend?

This training has been created for program and operational staff at commercial investment firms, development agencies, impact investing organizations, philanthropic foundations, and development finance institutions/multi-lateral development banks.

The training will provide participants with an intermediate understanding of blended finance. It is recommended that participants already have a basic knowledge of the topic. Following the training, participants will have a working knowledge of how to make sense of and implement blended finance transactions and frameworks within their respective organizations

## Information & Registration

Cost of attendance is __$2000__ per person. Complimentary ticket(s) are available for Convergence members who have registered for an annual membership. The training has limited space to ensure a personal, intensive and practice-driven learning experience. __Please contact aakif.merchant@convergence.finance to register or if you require any additional information.__


Convergence Blended Finance Training

Agenda

Join us in Amsterdam for a one-day training on blended finance that will include presentations, lectures and case studies by Convergence and third-party facilitators. The training will be interactive and directly engage and involve participants in the learning process.

Blended finance training in Washington, DC. 

This fall we're launching the 3rd edition of our keystone report: The State of Blended Finance 2019.

The State of Blended Finance 2019 provides an updated analysis of the blended finance market based on Convergence’s continuous data and intelligence collection efforts as well as input from our partners and members. The 2019 report will also outline key blended finance trends and developments in the past year.

This report builds on our previous reports from [2017](https://www.convergence.finance/resource/1qdtFkf5Fq86S4u8U4G8YU/view) and [2018](https://www.convergence.finance/resource/7LEqTu0YeceaQugSWaSKSk/view).

Please join us in Amsterdam on __Tuesday, October 1__ from __8:30-10:00am__. The morning will include a discussion of blended finance trends and activities, followed by a networking reception. Breakfast and refreshments will be served.

The State of Blended Finance 2019: Europe Launch

The official Europe launch of Convergence's annual keystone report, the State of Blended Finance 2019.

This fall we're launching the 3rd edition of our keystone report: The State of Blended Finance 2019.

The State of Blended Finance 2019 provides an updated analysis of the blended finance market based on Convergence’s continuous data and intelligence collection efforts as well as input from our partners and members. The 2019 report will also outline key blended finance trends and developments in the past year.

This report builds on our previous reports from [2017](https://www.convergence.finance/resource/1qdtFkf5Fq86S4u8U4G8YU/view) and [2018](https://www.convergence.finance/resource/7LEqTu0YeceaQugSWaSKSk/view).

Please join us in New York on Tuesday, September 24 from 8:00-10:30am. The morning will include a discussion of blended finance trends and activities, followed by a networking reception. Breakfast and refreshments will be served.

The State of Blended Finance 2019: New York Launch

 
### Overview
There is a large capital bottleneck to make the Sustainable Development Goals viable. In a context of global uncertainties, impact projects face major funding difficulties, making new impact investing approaches necessary. Blended Finance has the potential to create solutions to these challenges in an innovative way, enabling private, public, and philanthropic actors to catalyze strategic and sustainable solutions for social and environmental transformation.

In this exclusive event, Din4mo, in partnership with Convergence and Invest Social, will present a blended finance workshop, during which you will learn how your organization can use  blended finance strategies to invest in impact.


### Program Structure

The one-day event will be split into a [morning session](https://www.sympla.com.br/1-seminario-sobre-blended-finance-do-brasil-manha__573198?lang=en), open to all, and an [afternoon session](https://www.sympla.com.br/1-workshop-sobre-blended-finance-do-brasil-tarde__573205), open to ticket holders. The morning session will provide an overview of blended finance, and will also include panel discussions with Din4mo, IFC, Boticario Group Foundation, and other confirmed speakers. The afternoon session will be a more in-depth workshop, incorporating case studies, and engaging participants in the learning process.


The modules and agenda are designed to enable participants to uncover answers to the following questions, in the context of Brazil and Latin America & the Caribbean:


- What is blended finance and how can it be deployed strategically?
- What does the blended finance ecosystem look like?
- Who are the various participants and what is their level of activity?
- What are the key components of a blended finance transaction?
- What are the various financial instruments that are commonly observed in blended finance structures?
- How can development capital providers and private investors work together in order to create financial transactions that reflect each other’s criteria?
- What are some instructive examples of transactions that have successfully adopted this approach to crowd-in private capital for development?


### Information & Registration 
The morning session is free of cost and open to all. The afternoon session will have a cost of R$930. The event has limited space to ensure a personal, intensive, and practice-driven learning experience. Please follow the links provided to register, or reach out to support@convergence.finance if you require any additional information.




Blended finance seminar with Din4mo and InvestSocial

Agenda Blended Finance Seminar in Brazil v1[2] - Read-Only

In this exclusive event, Din4mo, in partnership with Convergence and Invest Social, will present a deepening workshop on the theme, during which you will learn how your organization can use and benefit from blended finance strategies, and investing in impact.



Dinamo Blended Finance Seminar in São Paulo

From August 28 to 30, Convergence, the Social Finance Academy, and the University of Zurich Center for Sustainable Finance and Private Wealth (CSP) will organize a Blended Finance executive program with support from the Swiss Agency for Development and Cooperation (SDC). The program is targeted at development agencies, public or multilateral organizations and foundations with a focus on international development. Eager to learn how to use public funds to attract private investment for high-impact enterprises addressing the SDGs? Click [here](http://www.finance-weiterbildung.uzh.ch/static/csp-registration/resources/iibf_flyer_zurich_2019.pdf) to learn more about the program.

 Impact investment & blended finance executive program

IIBF Flyer Zurich19

Join us in Switzerland for a blended finance training organized by Convergence, the Social Finance Academy, and the University of Zurich Center for Sustainable Finance and Private Wealth (CSP).

Have you heard about blended finance? Do you know how it could benefit your proposals? Do you know what the future holds for blended finance and how that will affect international development practitioners? If your answer to any of these questions is “no,” then this webinar is for you! This webinar is geared towards practitioners who are well-versed in blended finance practices as well as those who are just learning about its potential.

On July 25 at 11am EST, representatives from MEDA, Convergence, FinDev Canada and the Blended Finance Taskforce will come together to paint the picture of Blended Finance in the world of international development.

International Development and the New Terrain of Blended Finance

Blended Finance Ad - ENG & FR

Another year — and the dawn of the “[decade of action](https://www.un.org/sustainabledevelopment/decade-of-action/)”! As we begin the countdown towards 2030 and the deadline for the Sustainable Development Goals, we need to see an acceleration of sustainable solutions and the mobilization of governments, philanthropies, and businesses towards achieving these common goals. 

Since the adoption of the SDGs five years ago, the field of blended finance has transformed. What was once an ill-defined and unmapped field is now a familiar concept, which is drawing in new and ambitious actors and initiatives from across the public, private, and philanthropic sectors. 

At the same time, blended finance has not yet reached its full potential. Our [2019 State of Blended Finance](https://www.convergence.finance/resource/13VZmRUtiK96hqAvUPk4rt/view?utm_source=Mailchimp&utm_medium=Email&utm_campaign=Member%20newsletter&utm_content=CEO%20letter%202019) report found that the field has grown at about $15 billion per year since 2015 – but this is far from the trillions needed to achieve the SDGs in developing countries by 2030. The [Financial Times](https://www.ft.com/content/d52684e0-2c09-11ea-bc77-65e4aa615551) recently mused whether “2020 might be the year [blended finance] really takes off.”

Here are some of the key blended finance trends that we are watching for in 2020:

__1.	Globally, blended finance solutions for climate and conservation are gaining momentum __

We are seeing more blended finance solutions in areas where the SDG funding gap is largest, especially in sustainable infrastructure and climate action. Aggregate volume of blended finance in recent years [has been greatest ](https://www.convergence.finance/resource/13VZmRUtiK96hqAvUPk4rt/view)for Goal 11 (Sustainable Cities), followed by Goal 7 (Affordable Energy) and Goal 13 (Climate Action). At the same time, the private sector is increasingly recognizing its role in shifting “business-as-usual” into sustainable investments and business practices – with more than 2,400 businesses signing the UN Principles for Responsible Investing (PRI). Convergence has also launched a [grant window](https://www.convergence.finance/news-and-events/news/1Uy3130TPjru9yARcEnEnI/view) to support the design of blended finance solutions focused on natural capital in Asia.  

__2.	Institutional investors are beginning to pay attention__

Institutional investors are the largest potential pool of additional capital for the SDGs, representing approximately [$220 trillion](https://www.convergence.finance/resource/1hYbzLsUbAYmS4syyWuqm6/view) in assets under management (AUM). As more assets are allocated towards impact investing, responsible investing, and sustainable finance globally, there is a huge opportunity to crowd in institutional capital to blended finance solutions. And we are already seeing greater appetite for blended finance from large institutions like BlackRock, Allianz, AXA, and Prudential. As just one example, the world’s largest asset manager, BlackRock, [announced ](https://www.convergence.finance/news-and-events/news/F7wKMfkm3yrtOshsAxUcU/view)its participation in the Climate Finance Partnership (CFP) this past year. 

__3.	Catalytic capital providers are recognizing the importance of scale__

To achieve the SDGs by 2030, a significant scale-up of financing is required – and greater coordination between stakeholders is key. Specifically, development organizations should shift away from creating multiple small solutions and towards scaling up existing solutions that achieve both development impact and have the potential to mobilize private sector capital at scale. Initiatives created in 2019 like the [Catalytic Capital Consortium](https://www.macfound.org/programs/catalytic-capital-consortium/) and the [Tri Hita Karana Roadmap](https://www.oecd.org/dac/financing-sustainable-development/development-finance-topics/Tri-Hita-Karana-Roadmap-for-Blended-Finance.pdf) for Blended Finance are key to fostering collaboration and reducing the duplication of efforts. 

__4.	Development financiers must respond to demands for greater transparency__

Over the past year, there has been a growing focus on transparency and accountability in blended finance reporting. [We have noted in the past ](https://www.convergence.finance/news-and-events/news/7sFKqWx4m1yYbBlXvc2aFy/view)that increased transparency is not an end in itself, but an essential step towards improving the coordination, accountability, and effectiveness of blended finance. The availability of more information increases confidence within the private sector; allows concessional capital providers to make evidence-based funding decisions; and facilitates the monitoring of progress towards the SDGs. We anticipate continued demands for greater disclosure and impact reporting practices from all development financiers in 2020.  

__5.	Catalytic capital shifts from traditional grants to instruments like debt, equity, and guarantees__

Concessional capital providers are becoming more sophisticated actors in blended finance, adopting new strategic priorities (e.g., [U.S. Agency for International Development](https://www.usaid.gov/work-usaid/private-sector-engagement/policy)), financial instruments (e.g., [Global Affairs Canada](https://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/priorities-priorites/fiap_fsd-paif_fdd.aspx?lang=eng)), and internal capacities to more effectively engage the private sector in sustainable development. In this vein, catalytic capital is shifting from more traditional grant-based approaches towards the use of innovative tools and instruments. Most tangibly, [we have identified](https://www.convergence.finance/resource/13VZmRUtiK96hqAvUPk4rt/view) a relative decrease in the use of unconditional, non-returnable grants in blended finance, most often deployed in the form of design-stage funding or technical assistance. Instead, donor governments and foundations are formally participating in financial vehicles in the form of concessional debt, equity, guarantees, and risk insurance. 

__6.	Blended finance solutions can be designed and implemented at the local level__

Host country governments and local investors continue to remain largely absent from key blended finance conversations. In 2020, it is imperative that the development community embraces the “localization” of blended finance. This will require greater recognition of local ownership and support for capacity building, engagement with domestic public and private actors, and efforts to build local financial markets to support the long-term sustainability of blended finance solutions. While blended finance holds the potential to unlock more domestic capital, local investors often face additional and unique barriers to investing in blended finance transactions, which need to be better understood and addressed. 

__7.	Will blended finance break ground in additional sectors?__

To date, energy and financial services, two commercially oriented sectors, have been [the most frequent focus sectors ](https://www.convergence.finance/blended-finance#sectors)for blended finance. As development organizations become more sophisticated in their strategies and practices in 2020, we believe they will draw private capital into new sectors. We see untapped potential for blended finance in both the agriculture and health sectors. For example, USAID has [signalled interest](https://www.usaid.gov/cii/blended-finance) in supporting more blended finance solutions for the health sector, while the International Fund for Agricultural Development (IFAD) has been [leading research and coordination](https://www.inclusivebusiness.net/ib-voices/taking-critical-look-role-blended-finance-agriculture-emerging-learning-agenda) around blended finance for the agriculture sector. 





How do we think blended finance will evolve in 2020? Read the blog to find out. 

Seven blended finance trends for 2020

To achieve the Sustainable Development Goals (SDGs) by 2030, [a significant scale-up of financing is required](https:// "https://www.weforum.org/agenda/2016/07/blended-finance-sustainable-development-goals/"). According to our [State of Blended Finance 2019](https://www.convergence.finance/resource/13VZmRUtiK96hqAvUPk4rt/view) report, the approximate $15 billion in annual blended finance flows only scratches the surface of its potential to mobilize significant amounts of finance for the SDGs, especially when considering the resources available from global financial markets and capital markets (approximately $350 trillion and $220 trillion, respectively).

In the countdown to 2030, there has never been a more important time to scale blended finance, with plateauing levels of development assistance and a growing appetite from the private sector for sustainability and impact. 

Convergence offers several concrete recommendations to concessional capital providers for mobilizing additional private sector investment at scale, with a focus on the short- to medium-term.

__1. Focus on portfolio approaches:__ Portfolio approaches are more effective for mobilizing additional private sector investment at scale because (i) only a small number of stand-alone projects are large enough and (ii) diversification across projects reduces risk for investors. Indicatively, rating agencies often provide a two-notch upgrade for a portfolio of well diversified investments (e.g., a portfolio of “B-” projects is enhanced to a “B+” through diversification). 

__2. Prioritize vehicles operating at scale:__ The median blended finance vehicle has been around [$60 million](https://www.convergence.finance/blended-finance#deal-sizes-and-types) in total size, disbursing an estimated $15 million per annum. Instead, development organizations should allocate a healthy portion of catalytic funds (e.g., 50%) earmarked for blended finance to vehicles that have the capacity to disburse at scale, with the remaining blended finance budget allocated to smaller, more targeted interventions.

__3. Support solutions that can attract institutional investors:__ Institutional investors represent the largest potential pool of additional capital for the SDGs, representing approximately $220 trillion in assets under management (AUM). Blended finance solutions that include a senior debt tranche at investment grade (e.g., “BBB”) or strong non-investment grade (e.g., “BB+”) are best able to appeal to the largest universe of prospective investors.

__4. Scale proven solutions:__ To date, the median blended finance vehicle has raised small and inefficient levels of concessional capital (albeit vehicles should be right sized to their target markets). To scale, catalytic capital providers should shift away from creating multiple small solutions and towards scaling up existing solutions that are aligned with the two-fold objective of achieving development impact and mobilizing private sector capital at scale.

__5. Identify “ready to scale” SDGs, sectors, and countries:__ Blended finance is not a panacea for achieving the SDGs, but rather a good development tool for a subset of development activities. Our [recent Research Note](https://www.convergence.finance/resource/4h6HXzcZsMmJkjDqP6ktDl/view) looked at the scalability of blended finance for each of the SDGs, which was determined through an analysis of historical blended finance trends as well as SDG financing priorities across key stakeholders.

## So, which SDGs are ready to scale? 

In [the Note](https://www.convergence.finance/resource/4h6HXzcZsMmJkjDqP6ktDl/view), we propose four levels of alignment between blended finance and the SDGs in terms of the potential to scale in the short-term:

1. SDGs for which blended finance is well-aligned and with proven solutions that are ready to scale, 
2. SDGs for which blended finance is well-aligned, but need more proven solutions that are ready to scale
3. SDGs for which there is potential for additional innovation and/or evidence building around the use of blended finance, and 
4. SDGs for which blended finance is not well aligned.

![Blended finance and SDGs](//images.ctfassets.net/4cgqlwde6qy0/1UGDlSZAlCogpQpZBLP4T7/573aa417f3d2cdc59923ae40223a4293/Blended_finance_and_SDGs.png)

Based on our analysis, there are four SDGs that are “ready to scale”: Goals 7 (Affordable & Clean Energy), 8 (Decent Work & Economic Growth), 9 (Industry, Innovation & Infrastructure), and 13 (Climate Action). Importantly, there are an additional four SDGs with high potential to attract blended finance at scale: Goals 1 (No Poverty), 3 (Good Health & Well-Being), 5 (Gender Equality), and 11 (Sustainable Cities). 

This assessment of short-term scalability of SDGs is based on two main considerations: (i) the track record of blended finance to date and (ii) the appetite of capital providers. In the first case, we found that blended finance is best poised to scale for Goals 7 (Affordable & Clean Energy), 8 (Decent Work & Economic Growth) and 9 (Industry, Innovation & Infrastructure) given historical trends around size, vehicle, and private sector mobilization. In terms of appetite, we identified that key blended finance stakeholders (e.g., donors, impact investors, institutional investors) had the greatest appetite for Goals 5 (Gender Equality) and Goal 13 (Climate Action).

Across these SDGs, and others, it is critical to focus on scaling, and replicating, existing blended finance solutions as well as tailoring these solutions for lower-income contexts.


In this blog Convergence offers several concrete recommendations to concessional capital providers for mobilizing additional private sector investment at scale, with a focus on the short- to medium-term.

Scaling blended finance for the SDGs

Five recommendations for scaling blended finance for the SDGs

Our Senior Associate Alejandro Diaz Loyola breaks down the two main components any blended finance transaction must have: 1) concessional capital and 2) commercial capital.

Watch more videos from our #ConvergenceAnswers series [here](https://www.youtube.com/channel/UCG1QV2Lpspj59AnYua2PihQ). 

Our Senior Associate Alejandro Diaz Loyola breaks down the two main components any blended finance transaction must have: 1): concessional capital and 2) commercial capital.

What are the key components of a blended finance deal?

What are the key components of a blended finance transaction?

In November, Convergence launched two new design funding windows: i) the [Indo-Pacific Design Funding Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window), initially focused on sustainable and resilient infrastructure, in partnership with the Australian Government, and ii) the [Asia Natural Capital Design Funding Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window), in partnership with the [RS Group](http://www.rsgroup.asia/). Through both windows, we will deploy grants to support the design of early-stage blended finance transactions that aim to attract private capital at scale to the Asia-Pacific region in the identified focus areas. 

Here, we break down what design funding is, and where we see its greatest potential to strategically use grant funding to accelerate the blended finance market and support the launch of transactions that have a demonstration effect for the market. 

## What is design funding?

While blended finance holds significant potential to crowd in additional capital to achieve the Sustainable Development Goals, these transactions can be complex, time intensive, and highly costly to structure and launch. 

Design-stage funding supports transactions that may otherwise be too risky or complex to pursue, by funding activities such as i) feasibility studies (e.g., to assess the investability or bankability of a transaction) or ii) proof of concept (e.g., to complete design and structuring activities to launch a transaction). Design funding is typically provided as traditional grant capital; however, we’ve also seen models that use repayable grants and other innovative mechanisms (e.g., funders have the option to take an equity position at a discounted rate if the transaction closes). 

Grant funding in the form of design funding is different from technical assistance, another common form of grant funding for blended finance transactions. Design-stage grants are provided prior to the financial close of a transaction and are specifically aimed at providing funding and early stage support to a team that is designing and structuring the transaction. Meanwhile technical assistance funding can be deployed at different stages of a transaction to support a variety of activities throughout the investment cycle, such as developing pipeline and impact monitoring.

## What does design funding look like in practice? 

Convergence has captured 68 blended finance deals in our historical deals database that use design funding. These deals represent over $9 billion in aggregate deal flow. Relative to the overall blended finance market, design funding recipients have been more likely to be companies. While companies represent 16% of vehicles in the overall blended finance market, they represent over a third of transactions (34%) that have used design funding. This may be because design-stage grants can provide critical support to early-stage businesses that require seed capital but face challenges finding investors due to higher transaction costs and insufficient returns potential. 

To date, design funding has been most commonly provided through grant programs such as [Rockefeller’s Zero Gap Portfolio](https://www.rockefellerfoundation.org/our-work/initiatives/innovative-finance/), [USAID’s Development Innovation Ventures](https://www.usaid.gov/div), and [Blue Haven Initiative’s Catalytic Investments fund](http://www.bluehaveninitiative.com/portfolio/initiatives/). We have also seen design funding target specific sectors and vehicles via Challenge Funds, whereby public funding is awarded, on a competitive basis, to innovative solutions developed by the private sector that yield social benefits. For example, the [Africa Enterprise Challenge Fund](https://www.aecfafrica.org/), funded by the UK’s Department for International Development (DFID) along with other public donors, awards early-stage grant funding to private sector companies in the agribusiness, renewable energy, and financial services sectors in select countries across Africa. 

Design funding can be a particularly useful tool for supporting the development of blended finance solutions in frontier markets and nascent sectors. For example, our latest [Data Brief](https://www.convergence.finance/news-and-events/news/4akfHG7NMBvgX6wluH5o93/view) on design funding in blending for conservation finance finds that conservation projects have been twice as likely to benefit from design-stage grants relative to the overall market. When it comes to conservation finance it can take more time and resources to design finance mechanisms that generate cash flows, establish lawful and equitable land claims, and develop measurable targets. For example, the [Land Degradation Neutrality Fund](https://www.unccd.int/actions/impact-investment-fund-land-degradation-neutrality), an impact investment fund dedicated to supporting sustainable land management and land restoration, received initial funding from the Governments of France, Luxembourg, Norway and the Rockefeller Foundation through its [Zero Gap Portfolio](https://www.rockefellerfoundation.org/our-work/initiatives/innovative-finance/) to build a pipeline of viable investment projects and support the development of appropriate impact metrics. 

In addition to frontier markets and nascent sectors, design funding can also be used to bolster the impact of blended finance solutions. For example, design funding has been commonly used to promote gender equality; [one-third](https://www.convergence.finance/resource/MRXElDzK68dYtZKJbjr2r/view) of blended finance deals that have benefitted from design funding have had a gender focus. Design funding can support gender equality by i) providing support to integrate a gender lens early in the design of a transaction, ii) de-risking the development of a transaction targeted to a critical but underserved or underfunded market, and iii) deepening the impact of a gender-focused transaction by supporting development of additional gender tools. 

For example, [Women’s World Banking](https://www.convergence.finance/news-and-events/news/27qyRHXTtKc20EEG8GwoiM/view) leveraged a design-stage grant from Convergence to develop its [Gender Assessment Methodology](https://www.womensworldbanking.org/take-action/gender-assessment-methodology/) tool, which will be used to assess gender diversity among the staff and client base of the companies the fund will invest in. Additionally, the [Women’s Livelihood Bond](https://www.convergence.finance/resource/1VB77bWNu0cGEeaCsOYwCq/view), which lends to enterprises focused on empowering women in Southeast Asia, leveraged design-stage grants provided by the Rockefeller Foundation’s Zero Gap Portfolio to support the costs of identifying and conducting due diligence on a strong pipeline of underlying women-led and women-focused social enterprises, thereby improving the investability of the transaction. 

## Convergence’s design funding program

Convergence’s [design funding program](https://www.convergence.finance/design-funding) is the only funding program exclusively providing design stage grants for innovative blended finance solutions. Since the establishment of the program, Convergence has awarded $6 million in funding to 18 solutions, which have gone on to mobilize over $400 million from public, philanthropic, and private investors. 

To date, Convergence has most frequently supported transactions in the clean energy sector (39% of grantees). For example, Convergence partnered with the Development Bank of Southern Africa and the Coalition for Green Capital to support the establishment of the [Climate Finance Facility ](https://www.convergence.finance/design-funding/grant-portfolio/7hiK3ZRA1UgE0WQyIE6Cgo/view)(CFF), which is the developing world’s first “Green Bank”. Here, design funding was used to adapt a proven model in developed markets to an emerging market context. The CFF will be used to scale up private investments in climate-friendly infrastructure projects in the Southern African Development Community region and aims to prove replicability across middle and lower income countries. 

Convergence has also provided design grants to prove the investability of sectors that are often grant-funded, such as water and sanitation. In 2018, Convergence awarded [Developing World Markets](https://www.convergence.finance/design-funding/grant-portfolio/3PGdrDt5Yrns3XXUwM5UGF/view) (DWM) a proof-of-concept grant to structure a $100 million Water, Sanitation, and Hygiene (WASH) Note to on-lend to financial institutions and businesses active in the WASH space. Convergence’s grant allowed DWM to complete the design work needed to reach financial close including finalizing the borrower pipeline, vehicle structuring and establishment, investor commitments, and contracting service providers.

## Check out our new design windows

To  view our full grant portfolio and find out more about our new design windows, including information about our eligibility criteria, evaluation criteria and application process, visit our [design funding page](https://www.convergence.finance/design-funding). 


Design-stage funding supports transactions that may otherwise be too risky or complex to pursue. This blog explores why it's important for the blended finance market with concrete examples. 

What is design funding & what does it look like in practice?

To accelerate the blended finance market, we need more design funding

Institutional investors have become increasingly open to non-traditional, high yield investment opportunities as they grapple with low yield environments. 

We have seen an increase in their appetite for blended finance transactions with examples such as Allianz SE, the world’s largest insurance company, placing $115 million in the [Emerging Africa Infrastructure Fund](https://www.convergence.finance/resource/6BYvXp0lws20g6yI6U8oEc/view) (EAIF) in 2018. EAIF is a blended finance fund that lends to infrastructure projects across Africa, with significant exposure in the least developed countries. The fund has lent $1.2 billion to 64 projects, while attracting co-investments of $10 billion since its inception in 2005. 

As institutional investors start showing up in more blended finance transactions, it is important to remember that they are a heterogeneous group with varying mandates operating within diverse regulatory constraints. Similar investors in different regions will also behave differently. Below, we take a closer look at insurance companies and pension funds, including their constraints and their appetite for and activity in blended finance. You can also access a more in-depth analysis of institutional investor segments and blended finance in our [Who is the private sector?](https://www.convergence.finance/resource/1hYbzLsUbAYmS4syyWuqm6/view) report. 

## How insurance companies are beginning to embrace blended finance

Insurance companies value income over capital appreciation and will therefore be drawn to the premiums offered by alternative assets. In delivering on their long-term obligation to policyholders, they are guided by the duration of their liabilities, the risk-return profile of investment options, and their regulatory limitations.  

Convergence’s data on historical deals shows that insurance company AXA  has participated in nine blended finance deals, with an average transaction size of $303 million. Two-thirds of these investments have been in funds (both debt and equity funds) – with two direct investments in companies and then one investment in a facility. These transactions have been primarily focused on the financial services sector.  

The higher exposure to funds points to a global trend observed by Convergence that [44% ](https://www.convergence.finance/blended-finance#deal-sizes-and-types)of all closed blended finance deals over the last two decades are funds. Investing in funds is an effective strategy for spreading risk and diversifying portfolios. It’s also a lower risk entry point for investors. 

## Blended finance has the potential to open doors for pension funds

For pension funds whose fiduciary responsibility requires capital preservation to lead their investment strategies, we see a different ethos that hinges on regulators’ requirement for the application of prudence and diligence. Pension funds therefore face stringent restrictions on riskier asset classes in the form of percentage allocations and instruments. However, consistent income is preferred, and we see this in their portfolios. 

In Kenya, where the Retirements Benefits Authority (RBA) provides statutory limits for allocations to various asset classes, less than 20% of total assets under management are allocated to alternatives, falling well below the statutory ceiling. One of the biggest reasons cited is the inadequate understanding of alternatives and their risk profiles; belying the conservative nature of local pension fund managers. Strengthening the capacity of the investment teams and their trustees could unlock their potential for a more diversified portfolio of long-term yield generating assets, income growth, and capital appreciation. 

We see a role for blended finance here. Blended finance can help these conservative investors better understand the market, its opportunities, and how they can build robust portfolios that are structured to minimize their risk exposure. There’s also potential to share valuable knowledge and experience from their peers in more developed markets, who have direct investment expertise in blended finance transactions.

In developed markets we see pension funds building investment portfolios that include blended finance transactions in emerging and frontier markets. PensionDanmark and Christian Super with AUM of €31.5 billion and $1.5 billion, have invested in blended finance funds in the agriculture and energy and energy and financial services sectors, respectively. Although [PensionDanmark reported its infrastructure investment returns at 12.98% in 2017](https://www.infrastructureinvestor.com/pensiondanmark-tops-peers-12-8-infra-return/), from investments made in projects in Europe, North America, and Taiwan, there is a dearth of data on the actual performance of historical investments into these assets, and especially those that are blended. This is an area that requires additional research and transparency, to attract greater investment from other institutional investors. 

## Blended finance and the private equity market

In an emerging market like South Africa, where the Johannesburg Stock Exchange’s (JSE) performance has slowed in the past few years with lower returns expected in the medium term, institutional investors such as Sanlam have acquired stakes in medium sized companies such as MicroEnsure, and have invested in blended private equity funds such as Climate Investor One where concessional capital is present in subordinated form or is used to provide technical assistance. Blended finance has effectively offered these investors a bridge between public equities that are not meeting their return targets and private equity; which would otherwise be deemed too risky in absolute terms, irrespective of its prospective incremental returns. 

Across the private equity market, [RisCura/SAVCA’s Q4 2017 Report](https://www.riscura.com/market-insights/riscura-savca-private-equity-performance-report-south-africa-q3-2017-2/) shows that private equity in particular outperformed the JSE’s All Share Total Return Index over a 10-year period to Q3 2017. Given the role of blended finance in creating better performing investable opportunities, there could be a continued uptick in investments in alternatives. Moreover, as Convergence data on global trends shows, the number of blended deals has been increasing in earnest since 2009, with over $140 billion of financing reported in Convergence’s [State of Blended Finance Report 2019](https://www.convergence.finance/resource/13VZmRUtiK96hqAvUPk4rt/view). 

## Blended Finance appeals to diverse investors for distinct reasons

The World Bank report, “[Contribution of Institutional Investors: Private Investment in Infrastructure](https://ppi.worldbank.org/content/dam/PPI/documents/PPI_InstitutionalInvestors_Update_2017.pdf)” for the period 2011 – H1 2017 showed that 41 projects had institutional investors. An important finding was that “country ratings are not a key consideration if backed by Development Finance Institution or government support.” That support is structured through various blended finance archetypes. Most of the projects were domiciled in countries with “speculative” and “highly speculative” ratings in sub-Saharan Africa and Latin America/Caribbean. 

What the World Bank report and Convergence’s own data tell us is that there is appetite among institutional investors for alternative asset classes and blended finance transactions, however, their structures must be clear and robust and should appeal to the distinct mandates and regulatory constraints facing each investor. 

This blog explores how  insurance companies, pension funds, and the private equity market engage in blended finance. 

How institutional investors engage in blended finance

Institutional investors are all rational, but they’re not the same

Our former Senior Associate Liane Leger breaks down the difference between public private partnerships and blended finance.

Watch more videos from our #ConvergenceAnswers series [here](https://www.youtube.com/channel/UCG1QV2Lpspj59AnYua2PihQ). 



Our former Senior Associate Liane Leger breaks down the difference between public private partnerships and blended finance.

What's the difference between blended finance and PPPs?

BNP Paribas is one of the largest banks in the world, operational in over 70 countries, with total assets over €2 trillion. The bank is poised to become one of the key commercial players in blended finance.

BNP Paribas’ first blended finance transaction was back in 2017. They were part of a multi-stakeholder group (UN Environment, World Agroforestry Centre (ICRAF), ADM Capital) that conceptualized the [Tropical Landscapes Financing Facility](https://www.convergence.finance/resource/4tO5LULlfeb6QJroKuVHJ1/view) (TLFF), which provides financing for renewable energy and smallholder livelihood projects in Indonesia. In February 2018, TLFF completed its inaugural transaction, a landmark $95 million sustainability bond to finance sustainable natural rubber production across heavily degraded concession areas in the Jambi and East Kalimantan provinces. BNP Paribas was the lead arranger in the deal, leading the financing stage of the project. 

Fast forward to today. BNP Paribas is actively marketing blended finance deals to their clients and have 8-10 blended finance projects in the pipeline that target various countries, including Indonesia, Vietnam, India, the Ivory Coast, and countries in Eastern Europe. 

We spoke to Pierre Rousseau, Strategic Advisor Sustainable Business at BNP Paribas, about the challenges BNP Paribas encountered with TLFF and what they learned, the value BNP Paribas sees in blended finance, and what he wants to see from public and philanthropic investors. 

## What challenges did BNP Paribas encounter with the TLFF? 

First, these deals are complex. We exchanged over 11,000 emails to make the TLFF a reality. We’re talking about a $100 million project, so this type of transaction at this scale, with this many actors, took a lot of time and effort. We did a proof of concept, funded by Convergence’s [Design Funding](https://www.convergence.finance/design-funding), but many things we expected to happen in a certain way didn’t, because working in an emerging market there were just more unexpected issues, whether they were political, or physical like storms, or something else. In the end we struggled a bit. 

## Can you elaborate and also tell us about any important learnings?

One of the first things we learned was that it’s very important when we create a commercial facility like this that we create a grant facility next to it. A grant facility that allows us to get funding from philanthropy or government to finance the technical support, the control of the environmental and social conditions that we have put in place, and to measure the impact. Capital from government and philanthropy is also important when it comes to funding the concept note and pilot, which are critical elements for success that cannot come from the commercial side.  

The second thing we learned was the challenge of integrating small holders. If you are in agriculture, 20-30% of the production comes from small holders. So, to integrate the small holders into a blended deal, the financing you provide to your project must also be taken into account either by a microfinance institution or a local bank. That’s very challenging, you need people on the ground to make that happen. 

Finally, when we wanted to measure the impact we relied on NGOs, but that wasn’t working because they were doing it manually and were not consistent. We realized that we needed big data. If we want to be serious about launching projects of this size, we need to have all the information in order to measure the impact. On top of that we need data that is correct, clean, not manipulated, which will create trust and transparency, which is critical for blended finance. When you mix private, public, philanthropic money you need to be fully transparent and this is very difficult to achieve. 

## So, despite these challenges BNP Paribas has decided to pursue more blended finance projects. Why?

We have clients that are investors and on the other side corporates, who want solutions that help them integrate environmental and social aspects into their business. So, we try to meet our client’s needs and blended finance is one of the interesting ways we’ve found to solve their problems. This is where we can satisfy the offtaker, and the investor, and the small holders because we put them out of poverty, so we can check all the boxes. It’s the best solution we have found so far, to achieve what we want to achieve, in terms of climate change, biodiversity, inequality etc. Maybe tomorrow there will be a better solution and I’m more than happy to switch to that, but today this is one of the best solutions to finance the transformation of some of our clients. 

Today we have identified 8-10 blended finance projects that we are working on, primarily in energy and agribusiness. We are systematically approaching our clients with the blended finance methodology that we have put in place. And there’s a real appetite for it. We only started a few months ago and we have identified 60 leads with corporates, who are interested in acting as offtakers in a deal. That’s critical because whenever we talk about energy or agribusiness, in the end you always need an offtaker, someone to buy the goods. So, this is what we are pushing now. 

## Why do you think there is so much interest? 

We’re solving a problem for them by facilitating the development of these projects. 

Let me clarify who the investors are in deals like TLFF’s sustainability bond. Because we derisk and upgrade the rating through an international agency or public money, our investors in these blended deals are pension funds, insurance companies, sovereign funds, and private banks and specialized banks looking for impact. What attracts them is that there is an offtake agreement, that there’s a big name doing the offtake (Michelin), and that part of the money is guaranteed by public money and the first loss is taken by international agencies. It’s also the fact that the sponsor of the offtaker is also investing in the project. So, we’re aligning their incentives, which makes it very difficult for a client to say no.

Of course, yesterday I had a client tell me this is too complicated, I want something simpler. But this was a private company, which means they have additional means to finance themselves through their own balance sheets. Between listed companies and private companies, it’s easier for the private company to implement the solutions they would like to have into their own balance sheet. But for the rest, if you want to integrate the cost of transforming your business model to one that is more socially and environmentally responsible, you will impact your pricing. So that’s why blended finance is interesting for them, because they can do this transformation without affecting their balance sheet. 

## Speaking to the development agencies in the world, large foundations, and non-profits that want these projects to happen, what is your advice to them if they want organizations like yours and your clients on the commercial side to participate in these transactions?

What we need is to derisk. We need [guarantees](https://www.convergence.finance/news-and-events/news/5sx7ivKz7eNwZBlLNRfN87/view). Co-investing is good, it will improve the cost of funding, but it doesn’t derisk the transaction. We‘re currently trying to work with the DFIs, but there are challenges, because they are still too public project-oriented and not private project-oriented enough, so the methodology is not aligned, but we know each other, so I hope we’ll manage to do something together soon. 

## What would you tell other commercial players who may be interested in entering the blended finance space?

They can join us, under one condition. They need to accept the way we operate, because it took us a long time and much effort to get to where we are. We are one of the largest banks in the world, so we do believe that the way we operate is aligned with regulatory norms and what the society expects from us, so we don’t see any issues. In the future projects, hopefully you’ll see other banks joining us. 



We spoke to Pierre Rousseau about the value BNP Paribas sees in blended finance and what he wants to see from public and philanthropic investors. 

Pierre Rousseau of BNP Paribas talks blended finance 

Member spotlight with Pierre Rousseau of BNP Paribas

There has been no shortage of new research on blended finance over the past two months, ranging from evaluating impact and innovative guarantees, to new forms of concessional capital. At Convergence, we’re constantly on the lookout for new literature to add to our [Resources](https://www.convergence.finance/resource) page, where we’ve curated the most up to date blended finance knowledge, both by Convergence and by organizations in our network. 

Here, we’ve highlighted some key takeaways from the new research produced on blended finance this autumn:

## 1) Evaluating Impact

Comprehensive impact measurement has increasingly been recognized as a central priority for many in the blended finance community. Yet, data and transparency in impact performance continue to be a key challenge. 

In [Evaluating Impact Performance](https://thegiin.org/research/publication/evaluating-impact-performance), the Global Impact Investing Network (GIIN) emphasizes the need for standardized metrics for measuring and comparing impact within sectors, and focuses on impact in two specific development areas: [clean energy](https://www.convergence.finance/resource/5DjskpPA0ABpxGibd038Fn/view) and [access to housing](https://www.convergence.finance/resource/5WSmmWrEBe0X0Doz4VY0JX/view). The GIIN finds that context and nuance is critical to comparing impact results in a meaningful way, and emphasizes the importance of sector-specific metrics. For example, many of the metrics used in the housing report (e.g., number of units of new housing) were entirely different than those in the energy report  (e.g., energy savings per product sold). Convergence has [similarly found](https://www.convergence.finance/news-and-events/news/4mzPEgrlPWdu64iZvkKRei/view) that the majority of metrics used in blended finance transactions are specific to the underlying activity(ies) financed. 

Meanwhile, Development Initiatives’ report, [How blended finance reaches the poorest people](https://www.convergence.finance/resource/yGlGgOlyvIcsfPzcWKbMw/view), looks at the impact of blended finance in aggregate and seeks to understand whether blended finance is reaching the hardest to reach populations. The report highlights that while the blended finance market is growing, only a small proportion takes place in the poorest and most vulnerable countries. Convergence (“[The State of Blended Finance 2019](https://www.convergence.finance/resource/13VZmRUtiK96hqAvUPk4rt/view)”), the United Nations Capital Development Fund ( “[Blended Finance and the Least Developed Countries](https://www.convergence.finance/resource/18Z4yOOEBY5JFDHQAKyDpH/view)”), and the OECD (“[Blended Finance Funds and Facilities 2018 Survey Results](https://www.convergence.finance/resource/23R5uOpgD9Api08k8QK1Xk/view)”) have all reported similar findings. Development Initiatives ultimately concludes that more data is needed to adequately assess the anticipated and actual impact of blended finance on these populations, including on (i) the quality of investments, (ii) key intended and actual beneficiaries, (iii) and the systematic, long-term effects of blended finance. 

## 2) Innovative guarantees

There has been growing attention on the strategic use of guarantees in blended finance to mobilize additional sources of commercial finance. Although not a new instrument, guarantees have increasingly been recognized for their ability to efficiently leverage private sector capital as well as facilitate local currency investments. 

As highlighted by the CSIS report, [Innovations in Guarantees for Development](https://www.convergence.finance/resource/7kJbWezOt1eyDmEGTyfqXj/view), guarantees offer several benefits to investors and project sponsors, including i) reducing the cost of capital by transferring project risks, ii) facilitating project implementation, and iii) helping to develop local capital markets. While MDBs and DFIs have been the most common provider of guarantees, a central recommendation of the report is the need to create and support specialized guarantee providers to help develop local capital markets and scale up investments. 

Our latest case study focuses on one such example. The case study on [Quantum Terminals’ Credit-Enhanced Corporate Bond](https://www.convergence.finance/resource/3Zf0dQHdBUgKcmtdStMRxA/view) showcases how GuarantCo, a specialized guarantee provider, can support companies in emerging markets to raise local currency financing. GuarantCo supported Quantum Terminals, a local fuel and energy infrastructure developer in Ghana, to raise local currency financing from domestic institutional investors through the provision of a partial (75%) guarantee. The case study demonstrates how guarantees can play a role in strengthening domestic markets by displacing the need for hard currency financing and increasing the pipeline of bankable projects. 

## 3) New forms of concessional capital

Finally, we are also seeing a proliferation in the types of concessional capital used in blended finance transactions. While concessional capital providers have traditionally deployed grants, we are increasingly seeing the public and philanthropic sectors turn towards more nuanced instruments to better leverage private financing.

In the [State of Blended Finance 2019](https://www.convergence.finance/resource/13VZmRUtiK96hqAvUPk4rt/view), we noted that concessional capital providers are becoming more sophisticated in their strategies to engage the private sector in sustainable development. The IFC’s [latest report](https://www.convergence.finance/resource/BMcWTC9pSiMje148pZDDO/view) on blended concessional finance investigates the rise of one of these strategic approaches: the use of “returnable capital” from donor governments. This new model departs from traditional grant models in that the principal and interest, if any, are repaid. This gives donor governments the potential to redeploy funds, thereby increasing the total resources available for development activities. 

Ultimately, concessional capital comes in many forms, and varies depending on the type of provider.  For example, while returnable capital is increasingly used by donor governments, DFIs use a variety of different instruments to provide concessional capital to private sector clients. This is examined by the DFI Working Group in its [October publication](https://www.convergence.finance/resource/6o8IH6vpQytSGRSYEcUcb8/view), which finds that DFIs most commonly deploy senior debt, equity, and grants amongst other instruments. 

## Check out our Resources page 

This blog summarizes just a few publications that have come from the blended finance community in the last few months. For more of the latest research on blended finance, check out our [Resources](https://www.convergence.finance/resource) page.


In this blog, we’ve highlighted some key takeaways from the new research produced on blended finance this autumn

New blended finance research

Latest blended finance research circles around three themes

*Toronto, November 12, 2019* – Today, we announce that the Australian Government and Convergence have partnered to invest AU$3.5 million in blended finance to meet development challenges in the Indo-Pacific region.

The $3.5 million will be used to create a [design funding](https://www.convergence.finance/design-funding) window for grants to early stage blended finance solutions, over a three-year period.
     
The Indo-Pacific Design Funding Window focuses on supporting solutions that aim to attract private investment into three focus areas: sustainable and resilient infrastructure, sustainable agriculture and food security, and gender equality. Approximately five to eight grants will be awarded in the three-year period, in an amount up to AU$490,000 for each grant. In the first phase, the funding window will focus on sustainable and resilient infrastructure, followed by the other focus areas.
     
Blended finance is the use of catalytic capital from public or philanthropic sources to increase private sector investment in developing countries for sustainable development.
     
By supporting innovative blended finance solutions to get off the ground, the Australian government will draw institutional investors to critical development areas in the Indo-Pacific region, such as infrastructure, gender equality, and agriculture, and ultimately help drive sustainable development in the region. The AU$3.5 million window is expected to catalyze an exponential amount of capital from private, public, and philanthropic investors. 
     
There is no shortage of private capital in, and outside, the Indo-Pacific region. The region has been the fastest-growing asset management market globally in the past five years, accounting for 45% of global inflows over the period, with assets under management at US$16 trillion in 2017. At the same time, the region is home to over 740 million people who still live in extreme poverty. 

“This is the latest example of the Australian government’s leadership in blended finance in the region, where it continues to be an important blended finance champion and market builder,” says Joan Larrea, CEO of Convergence. “We are grateful for this partnership, which will be the first step in our strategy to greatly scale our activities in the region and bring to life more effective blended finance vehicles that drive private capital to places that need it most.”
     
The new window is currently accepting applications, organizations are encouraged to apply [here](https://www.convergence.finance/design-funding).

__About Convergence__

Convergence is the global network for blended finance. We generate blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. Convergence has an impressive track record of supporting early-stage blended finance solutions that will attract private sector funding at scale and make long-term impact. Now in its fourth year of operation, Convergence’s existing [Design Funding ](https://www.convergence.finance/design-funding)Facility, which is funded by the Government of Canada, is delivering strong results. It has awarded over US$6 million in funding to 18 solutions, which have catalyzed over US$400 million in capital for critical development sectors.  

__Media Contact__

Sijia Yi

Communications Lead

Tel.: +1 647-573-5993

sijia.yi@convergence.finance



The $3.5 million will be used to create a design funding window for grants to early stage blended finance solutions, over a three-year period.

DFAT & Convergence launch AU$3.5 million funding window

Australian Government & Convergence partner on AU$3.5 million blended finance funding window

*Toronto, 11 November, 2019* – Today, [RS Group](http://www.rsgroup.asia/), a Hong Kong family office focused on sustainability, and Convergence have launched a US$3 million [design funding](https://www.convergence.finance/design-funding) window for innovative and catalytic blended finance solutions focused on natural capital in Asia. Grants will be awarded in amounts ranging from US$50,000 to US$500,000. 
     
The Asia Natural Capital Design Funding Window (the Window) aims to support practitioners who are finding new ways to enhance and protect the world’s stocks of natural assets, including water, land, soil, air, plants, and animals. The Window will support the design and launch of blended finance solutions focused on natural capital, which attract private investment at scale. These solutions will directly support the United Nations Sustainable Development Goals and could contribute to protecting biodiversity, reducing the degradation of ecosystems (e.g. deforestation), mitigating and adapting to climate change, reducing unsustainable use of land and oceans, and providing a fair and sustainable living to local communities.

Asia’s enormous economic growth in the last few decades has come at a high cost to its environment, leading to deterioration of land, freshwater, and marine ecosystems and exacerbating water and food insecurity and climate vulnerability. Globally, it is estimated that there is a US$200-300 billion gap per year to preserve the world’s last healthy ecosystems. Business as usual will mean irreparable damage to some of our most valuable natural assets.

“This significant funding gap for the preservation of ecosystems is both a challenge and an opportunity for the economy, society, and investors,” says Annie Chen, Founder of RS Group. “Capital investment and behavior change are needed today to ensure we have a chance at survival, before we reach the tipping point and lose any possibility of a ‘tomorrow’. Through supporting the Window, we aim to use our capital to catalyze exponential investment into preserving the ecosystems that sustain our lives, and foster the development of the natural capital space in Asia.”

Blended finance uses catalytic capital, such as grants from private or official sources, to attract commercial capital into products that would traditionally not be considered commercially attractive. By supporting the design of new blended finance solutions targeting natural capital, the Window will draw new investors into this critical, but underfunded development area. The US$3 million window is expected to catalyze an exponential amount of capital from private, public, and philanthropic investors.  

“Based on Convergence’s data, Asia has presented itself as the next frontier for blended finance, with 31% of blended finance transactions targeting Asia in 2016-2018,” says Joan Larrea, CEO of Convergence. “This partnership is another example of the rising use of blended finance in the region to support the Global Goals. We are grateful to RS Group for partnering with us to see how blended finance can advance the field of natural capital in such a critical region.”
     
Knowledge and lessons learned derived from the solutions funded by the Window will also be shared with the wider field, to inform and build the blended finance and natural capital investment ecosystem.

The Window is open to co-funding opportunities. Organizations interested in supporting this window and the design and launch of new blended finance vehicles that aim to catalyze private investment for natural capital are encouraged to contact Convergence at: design.funding@convergence.finance 
 
The Window is currently accepting applications for funding. Practitioners with on the ground presence or partnerships in Asia are encouraged to apply. Apply [here](https://www.convergence.finance/design-funding).

__About Convergence__

Convergence is the global network for blended finance. We generate blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. Convergence has an impressive track record of supporting early-stage blended finance solutions that will attract private sector funding at scale and make long-term impact. Now in its fourth year of operation, Convergence’s existing Design Funding Facility, which is funded by the Government of Canada, is delivering strong results. It has awarded over US$6 million in funding to 18 solutions, which have catalyzed over US$400 million in capital for critical development sectors.  

__About RS Group__

RS Group is a mid-sized Hong Kong-based family office.  Our mission is to create a paradigm shift in people’s values and priorities so that economic growth will support, instead of jeopardize, human development and environmental sustainability.  In the face of pressing challenges presented by climate change, we feel even greater urgency to put our capital into protecting “the commons”, and to foster multi-sector collaboration focused on addressing issues relating to climate and the environment in HK and Asia. 

Our portfolio of investments and philanthropic activities are managed with a “Total Portfolio Management” approach, and our value creation is measured on a “blended value” basis across the portfolio.  A report summarizing our mission, history, investment and philanthropic activities can be downloaded [here](http://report.rsgroup.asia/).   

__Media Contact__

Sijia Yi

Communications Lead

Tel.: +1 647-573-5993

sijia.yi@convergence.finance


RS Group and Convergence have launched a US$3 million design funding window for innovative and catalytic blended finance solutions focused on natural capital in Asia. Grants will be awarded in amounts ranging from US$50,000 to US$500,000. 

RS group & Convergence launch US$3 million grant window

RS group & Convergence partner on US$3 million blended finance funding window for natural capital in Asia

Peter Wamicwe, our Associate, Africa, explains minimum concessionality: the process of deciding the minimum amount of concessional capital needed to attract private capital. 

Watch more videos from our #ConvergenceAnswers series [here](https://www.youtube.com/channel/UCG1QV2Lpspj59AnYua2PihQ). 

Peter Wamicwe, our Associate, Africa, explains minimum concessionality: the process of deciding the minimum amount of concessional capital needed to attract private capital. 

What is minimum concessionality?

*Originally published on the [Sustainable Energy for All](https://www.seforall.org/news/blended-finance-a-powerful-tool-for-achieving-sdg7) website. *

*The [Energizing Finance 2019 report](https://www.seforall.org/data-and-evidence/energizing-finance-series/energizing-finance-2019) series highlights a massive shortfall in finance commitments for electricity and clean cooking access in 20 countries with the greatest energy access deficits.*

One of the recommendations presented in [Energizing Finance: Taking the Pulse 2019](https://www.seforall.org/publications/energizing-finance-taking-the-pulse-2019) is for government to “Take the lead in enabling blended finance for energy access.” It goes on to say that “Governments have the ability to secure concessional financing from multilateral and bilateral development partners that can be used to provide risk-tolerant financing to enterprises. This can in turn crowd in more commercial capital from investors.”

Blended finance is a term that gets used a lot in the context of Sustainable Development Goal 7 (SDG7)—affordable, reliable, sustainable and modern energy for all by 2030.

We asked 2019 SEforALL Charrettes participant Ladé Araba, Managing Director for Africa at Convergence Blended Finance, to explain this concept, why it is so crucial to achieving SDG7, and how this form of financing can evolve to help make SDG7 a reality.

__Let’s start with the basics. What does “blended finance” mean?__

Convergence’s definition of blended finance is the use of catalytic capital from public or philanthropic sources to increase private sector investment in developing countries towards sustainable development. We see this type of finance as directly targeting the SDGs.

__Why is blended finance so important to achieving the SDGs, particularly SDG7?__

Blended finance can address critical challenges to increasing access to clean and affordable energy. Providing energy access requires considerable capital expenditures in building the infrastructure to support energy supply, as well as on-going operations and maintenance.

For electricity, we know that millions of people live in rural communities with no grid connection. They are widely dispersed with very low levels of density. So, reaching these households is more costly and time consuming. The issue of affordability means project owners can’t charge full cost-recovery prices for the infrastructure, products, and services they deliver. This means that off-grid solutions must seek scale to be economical.

Without natural economies of scale, solutions must be cheap and easy to deploy and affordable credit must be provided to the end-users to facilitate affordability. This is where innovative blended finance vehicles and structures can lend a hand. They can help reduce the cost of capital, lower the cost of access, and attract large sums of financing to seemingly unattractive opportunities.

__Is the idea to catalyze private sector investment in projects by first having development funds committed to that same project?__

Exactly. That development funding is what we call concessional capital and it can come from public or philanthropic sources. We can create more investable opportunities in energy access projects by having concessional capital come into deals earlier when it is most risky, in order to create commercially viable projects, companies, and structures.

In addition, project sponsors and developers can work with partners to create more innovative financial products that are aligned with the commercial mandates of investors. Aligning these products with the existing financial instruments and products that investors are familiar with will help to increase their comfort levels, overcoming barriers to adoption.

![blended finance](//images.ctfassets.net/4cgqlwde6qy0/4wlN3IvEAFiPYizHOIkSgN/df3af445b0957e7805d0e5f0c670f068/blended_finance_.gif)

__What needs to happen for more blended finance to be directed towards SDG7?__

There needs to be a deeper understanding of the various blended finance structuring approaches. Convergence’s database of historical deals and its case studies on specific transactions are a useful starting point. This archive offers an evidence base for effectively structuring new deals and points investors looking to diversify their portfolios towards potential partners.  

__How else is Convergence contributing to the achievement of SDG7?__

Convergence is the global network for blended finance. We generate blended finance, data, intelligence, and deal flow to increase private sector investment in developing countries, in support of the SDGs. One way we contribute to SDG7 is through our [Design Funding](https://www.convergence.finance/design-funding) grant program, which supports the design of innovative blended finance vehicles that aim to attract private capital to global development. Under this program, 39 percent of grants have directly supported the achievement of SDG7. For example, we supported the design of the [Climate Finance Facility](https://www.convergence.finance/design-funding/grant-portfolio/7hiK3ZRA1UgE0WQyIE6Cgo/view), the first “Green Bank” in an emerging market, which is housed within the Development Bank of Southern Africa.

__What other successes have you achieved thus far?__

From our [database](https://www.convergence.finance/blended-finance) of roughly 500 blended finance transactions, our data shows that 162 blended finance deals have been aligned to SDG7 to date, representing over USD 72 billion, with participation from over 500 investors. We have seen these financing flows target projects (37 percent), funds (35 percent), companies (17 percent), facilities (9 percent), and bonds/notes (2 percent). At least half of that financing comes from private investors with commercial mandates, whose participation has been facilitated by concessional capital.

Convergence is presently also supporting capital raises for 32 SDG7-related deals that are seeking USD 2 billion in financing. These transactions have secured about USD 1 billion to-date and we are matching them to our global network of investors to help to close their individual funding gaps.



Our Managing Director for Africa explains blended finance, why it is so crucial to achieving SDG7, and how this form of financing can evolve to help make SDG7 a reality.