WaterCredit Investment Fund 3 (WCIF3) is a blended fund that provides debt financing to financial institutions and enterprises serving the water and sanitation needs of families living in poverty in Asia. WCIF3 was launched by WaterEquity, an impact investment manager established by Water.org co-founders Gary White and Matt Damon. WaterEquity is the first impact investment manager dedicated to ending the global water crisis. WCIF3 is WaterEquity’s first fund to use blended finance and is comprised of tiers of equity, catalytic debt facilities including multiple zero- and low-interest loans, and a first-loss guarantee.
WCIF3 achieved its final close at $50 million in March 2019, attracting investments from a range of impact investors, including foundations, high-networth individuals, and development finance institutions. WCIF3 began disbursing capital immediately after close, deploying seven loans to microfinance institutions, resulting in 60,000 microloans to families living in poverty. WCIF3 has also deployed one loan to a water and sanitation enterprise in India. WCIF3 provides several insights for others looking to create or invest in blended vehicles in the water and sanitation sector:
- Blended finance works for solutions that have an underlying market
- Blended finance often takes an iterative approach or is the result of iteration
- A compelling impact narrative can go a long way in blended finance transactions
- Leverage and additionality are context and project specific
- Non-governmental organizations (NGOs) can serve as meaningful partners and a source of pipeline