Finance
UK's development finance agency anchors $1 billion blended finance fund for emerging markets
Published by Global Banking and Finance Review
Posted on January 20, 2026
2 min readLast updated: January 20, 2026
Home > Finance > UK's development finance agency anchors $1 billion blended finance fund for emerging markets
Quick Summary
The UK's development finance agency supports a $1 billion fund to enhance climate investments in emerging markets, with a focus on Africa and renewable sectors.
UK's development finance agency anchors $1 billion blended finance fund for e...
Overview of the Blended Finance Fund
JOHANNESBURG, Jan 20 - UK development finance institution British International Investment (BII) said on Tuesday it would provide $40 million for a new $1 billion blended finance fund managed by Allianz Global Investors, aimed at boosting climate investments in emerging markets.
Investment Commitments
The Allianz Credit Emerging Markets (ACE) fund has so far secured $690 million in commitments and was launched on Monday in London, the BII and Allianz said in a statement.
Target Regions and Sectors
Development finance institutions such as BII and multilateral lenders will provide $150 million in concessional capital to cover initial losses, while private investors are expected to contribute up to $850 million.
Concerns and Challenges
If successful in reaching its $1 billion target, ACE would be among the largest blended finance vehicles created to date.
Blended finance, which combines public and private capital to tackle development challenges, has attracted renewed interest as governments and development lenders attempt to close the multi-trillion-dollar gap in global climate financing.
However, reviews by the OECD and the World Bank have raised concerns about its complexity and dependence on concessional public funds, with actual mobilisation volumes falling short of what is required.
The fund plans to target investments across emerging economies, allocating roughly 40% of disbursements to Africa, significantly above typical levels for similar funds, the statement said.
Other regions will share the remaining allocation, with key sectors including renewable energy, clean transportation, agriculture and financial services.
(Reporting by Karin Strohecker and by Colleen Goko; Editing by Kirsten Donovan )
Key Takeaways
- •BII commits $40 million to a $1 billion fund.
- •ACE fund targets climate investments in emerging markets.
- •40% of investments will be allocated to Africa.
- •Concerns about fund complexity and reliance on public funds.
- •Key sectors include renewable energy and clean transportation.
Frequently Asked Questions about UK's development finance agency anchors $1 billion blended finance fund for emerging markets
1What is blended finance?
Blended finance refers to the strategic use of development finance and philanthropic funds to mobilize private capital for investments in developing countries.
2What are emerging markets?
Emerging markets are economies that are in the process of rapid growth and industrialization, often characterized by lower income levels and higher volatility.
3What is climate finance?
Climate finance refers to the financial resources allocated to projects and initiatives aimed at addressing climate change and its impacts.
4What are investment funds?
Investment funds are pools of capital collected from multiple investors to invest in various financial assets, managed by professional fund managers.
5What are concessional capital contributions?
Concessional capital contributions are funds provided at below-market rates, often used to attract private investors by reducing their risk.
