Leverage ratios, placed into context with other considerations, can help to determine how effective concessional capital has been within blended finance transactions to date.
This Brief updates a study published by Convergence in 2018 that benchmarked leverage ratios for a sample of 72 blended finance funds. The study found that, on average, blended finance funds had leveraged $4 of commercial capital for every dollar of concessional capital, with only a fraction of this commercial capital ($1.10) coming from private sector investors. This Brief expands the universe of transactions under study to 340, including transactions structured with blending archetypes other than concessional debt and equity, like guarantees and technical assistance. Based on the sample of 340 transactions from Convergence’s database, every dollar of concessional capital has mobilized on average $4.1 in commercially priced capital, of which just under half ($1.8) on average has been sourced from private sector investors.
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