British International Investment has committed to act as anchor investor in the Allianz Credit Emerging Markets fund, a blended finance vehicle designed to channel large-scale private capital into climate-related projects across developing economies, with a significant share earmarked for Africa.
The fund, launched in London, is structured to support the goals of the Paris Agreement by reducing investment risk in emerging markets and making climate-focused projects more attractive to institutional investors. It brings together public development finance institutions and private investors in a structure intended to mobilise up to $1 billion for climate finance.
Under the arrangement, development finance institutions and multilateral development banks will provide $150 million in concessionary capital, which is expected to absorb risk and stabilise returns. This structure is designed to unlock up to an additional $850 million from private investors once the fund reaches its final close target. British International Investment will contribute $40 million of the concessionary portion, alongside participation from Canada’s development agency, a regional multilateral development finance arm in the Americas, and development agencies from Sweden and Denmark.
At its first close, the fund has already secured $690 million in commitments, with major institutional investors anchoring the senior tranche. Once fully raised, the Allianz Credit Emerging Markets fund is expected to rank among the largest blended finance funds globally, highlighting renewed investor interest in models that combine development impact with commercial returns.
The fund will deploy capital across sectors critical to sustainable growth, including renewable energy, clean transport, agriculture and financial services. Around 40 per cent of total disbursements are expected to be directed to Africa, a higher allocation than is typical for comparable blended finance vehicles, reflecting growing recognition of the continent’s climate financing needs and investment potential. The remaining investments will be spread across other emerging economies.
For African and other emerging market economies, the fund’s structure is particularly relevant for smaller businesses operating along climate-sensitive value chains. Improved access to long-term financing for renewable power, climate-smart agriculture and inclusive financial services can lower operating costs, reduce exposure to climate risks and open new growth opportunities for small and medium-sized enterprises that often struggle to attract commercial capital.
The investment marks the third transaction announced under British International Investment’s £100 million mobilisation facility, launched in 2024 to accelerate private capital flows into development priorities. Earlier commitments under the facility focused on green infrastructure in South-East Asia and a blended finance initiative designed to unlock life insurance capital for climate-related investments.
British International Investment has positioned the ACE fund as part of a broader strategy to use limited public capital to crowd in significantly larger volumes of private finance, particularly for climate action in lower-income and climate-vulnerable countries. The approach aligns with its commitment to increase the share of climate finance in its portfolio, with at least 30 per cent of new commitments between 2022 and 2026 directed toward climate-related investments.
The fund is managed by Allianz Global Investors, which views the vehicle as a practical demonstration of how collaboration between public institutions and private asset managers can scale climate finance beyond developed markets. By blending different layers of capital with varying risk and return expectations, the fund aims to deliver both competitive returns for investors and measurable environmental and development outcomes.
Beyond climate mitigation, the fund’s focus on sectors such as agriculture and financial services has broader implications for economic inclusion. Improved financing in these areas can strengthen food systems, expand access to credit and support enterprise growth, particularly in regions where climate shocks and capital constraints continue to limit productivity.
British International Investment, which invests in businesses across developing countries, has increasingly framed its role around addressing the root causes of poverty and climate vulnerability, with the longer-term goal of helping economies reduce dependence on aid. Its participation in the Allianz Credit Emerging Markets fund reflects a growing shift toward blended finance as a tool for achieving scale, impact and sustainability in development investment.
