BLENDED FINANCE for conservation

BLENDED FINANCE

FOR CONSERVATION

UNLOCKING PRIVATE SECTOR FINANCE

FOR SUSTAINABLE LANDSCAPE

MANAGEMENT WORKSHOP

MARCH 21, 2019

CONVERGENCE

WHAT IS CONVERGENCE?

2

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.

A GLOBAL NETWORK

We have a global membership of over 300 public,

private, & philanthropic institutions

DATA & INTELLIGENCE

Original content builds the evidence base for blended

finance, including data on past deals, trend reports,

case studies, region and sector briefs, and webinars.

DEAL FLOW

An online match-making platform for investors and

those seeking capital to connect on active deals.

MARKET ACCELERATION

Our Design Funding program awards grants for the

design of innovative vehicles that aim to attract

private capital to global development at scale.

INTRODUCTION TO

BLENDED FINANCE

CONVERGENCE 4

WHAT IS BLENDED FINANCE?

Source: Convergence

Private investment is crucial to close the $2.5 trillion annual funding gap threatening the

success of the Sustainable Development Goals (SDGs). One way to attract this private capital

is through blended finance – the use of catalytic capital from public or philanthropic sources

to increase private sector investment in emerging markets.

PRIVATE

CAPITAL

MobilizingBLENDED

FINANCE

STRUCTURES

Market-rate

Concessional

DEVELOPMENT

FUNDING

(Public/philanthropic

funders)

Blended finance transactions should have three signature markings:

1. Expected positive financial return

2. Contribute towards achieving the SDGs (not every participant needs

to have that development objective)

3. Public or philanthropic parties are catalytic (improve the risk/return

profile to attract participation from the private sector)

CONVERGENCE

CONCESSIONAL DEBT

OR EQUITY

GUARANTEE & RISK

INSURANCE

DESIGN / PREPARATION

FUNDING GRANT

TECHNICAL ASSISTANCE

GRANT

• Public or philanthropic

investors are concessional

within the capital structure

• Risk reduction tools that

protect investors against

capital losses

• Grant funding that supports

costs and activities that lead

to bankability of projects

• Funds to supplement the

capacity of investees

5

BLENDED FINANCE ARCHETYPES

Source: Convergence

CAPITAL STRUCTURE

Senior Debt

Flexible Debt

Equity

Junior Equity

CAPITAL STRUCTURE

Senior Debt

Guar

ante

e

Equity

CAPITAL

STRUCTURE

Senior

Debt

Gra

nts

Equity

CAPITAL STRUCTURE

Senior Debt

Equity

TA FACILITY

Grants

CONVERGENCE

42 52 67 81105

132170

210246

289326

362397 408

$0B

$20B

$40B

$60B

$80B

$100B

$120B

$140B

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Bill

ions

Aggregate Deal Count Aggregate Value

6

CURRENT MARKET ESTIMATE

Source: Convergence Historical Deals Database

$126B+mobilized to-date

3,000+financial commitments

1100+investors

KEY TRENDS: SUSTAINABLE

LAND MANAGEMENT

CONVERGENCE

5 6 8 9 1115

2228 29

38 3942

49 50

$0B

$2B

$4B

$6B

$8B

$10B

$12B

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Bill

ions

Aggregate Deal Count Aggregate Value

CURRENT MARKET ESTIMATE

8

$10B+mobilized to-date

340+financial commitments

60+active investors

Source: Convergence Historical Deals Database

CONVERGENCE

Source: Convergence Historical Deals Database

Convergence tracks country data by stated countries of focus at the time of financial close, not actual investment flows. Often, countries of eligibility are broader than those explicitly stated.

REGION FOCUS

9

Latin America &

the Caribbean

20% 38%

Sub-Saharan

Africa

44% 30%

East Asia &

Pacific

11% 6%

Middle East &

North Africa

15% 16%

South Asia

15% 8%

Europe &

Central Asia

4% 0%

Global

17% 28%

ALL

DEALs

SUSTAINABLE

LAND

MANAGEMENT

PERCENTAGE OF DEALS

CONVERGENCE

SUSTAINABLE

LAND

MANAGEMENT

$173M

$403M

$121M

$274M

AVERAGE DEAL SIZE

34%

28%

17%

47%

Technical Assistance Funds

Guarantee / Risk Insurance

Design-Stage Grant

Concessional Capital

PERCENTAGE OF DEALS

10

BLENDED FINANCE ARCHETYPES

Source: Convergence Historical Deals Database

ALL

DEALS

$59M

$541M

$63M

$108M

48%

24%

22%

60%

Technical Assistance Funds

Guarantee / Risk Insurance

Design-Stage Grant

Concessional Capital

CONVERGENCE 11

LEAGUE TABLES

Source: Convergence Historical Deals Database

DEVELOPMENT

AGENCIES & FUNDS

3

4

4

5

7

8

9

14

14

AfDB

Finnfund

CFC

PROPARCO

OPIC

IDB Invest

IFC

FMO

EIB

DEVELOPMENT BANKS &

FINANCE INSTITUTIONS

2

2

2

2

2

2

2

3

4

Shell Foundation

Postcode Lottery

Fund

Lundin Foundation

Kiva

Greater Impact

Foundation

Grantham Foundatio

Blue Moon Fund

Rockefeller

Conservation

International

FOUNDATIONS

& NGOS

2

2

2

2

3

3

3

3

5

Standard Chartered

Keurig Dr. Pepper

JP Morgan Chase & Co

Danone

Oikocredit

Calvert Impact Capital

AgDevCo

Schneider Electric

GEF (Fund)

COMMERCIAL &

IMPACT INVESTORS

2

2

3

4

5

7

9

10

13

NICFI

FAO

DFID

Dutch

MFA

GEF

(Facility)

AFD

MIF

GCF

USAID

CONVERGENCE 12

INVESTOR PROFILE: GREEN CLIMATE FUND

• GCF aims to leverage concessional public capital to

catalyze a flow of climate finance (including private

finance) to invest in low-emission and climate-resilient

development.

• GCF provides financing in the form of grants, loans,

equity or guarantees in eight strategic areas:

MitigationAdaptation

THANK YOU

13

APPENDIX

CONVERGENCE

Fund

50%Project

25%

Company

14%

Facility

7%

Bond / Note

2%

Impact bond

2%

DEAL TYPE

15

DEAL TYPE & SIZE

$682 M

$610 M

$175 M

$105 M

$47 M

Facility

Project

Fund

Company

Bond / note

AVERAGE DEAL SIZE

Source: Convergence Historical Deals Database

Company

14%

Facility

10%

Fund

66%

Impact

bond

2%

Project

8%

$0 M

$16 M

4510%M

$146 M

$278 M

Impact bond

Company

Project

Facility

Fund

ALL

DEALS

SUSTAINABLE

LAND

MANAGEMENT

CONVERGENCE

SUSTAINABLE

LAND

MANAGEMENT

$260M

$189M

$714M

$212M

$542M

$37M

$94M

AVERAGE DEAL SIZE

13%

1%

6%

25%

29%

2%

13%

Infrastructure

Housing and Real Estate

Health

Financial Services

Energy

Education

Agriculture

PERCENTAGE OF DEALS

16

SECTOR FOCUS

Source: Convergence Historical Deals Database

ALL

DEALS

$102M

$52M

$908M

$67M

$113M

6%

18%

14%

24%

60%

Infrastructure

General

Financial Services

Energy

Agriculture