26.05.2011

More investment in Global Climate Partnership Fund

IFC and Danish Ministry of Foreign Affairs pledge USD 82 million

The Danish Ministry of Foreign Affairs is set to invest USD 7 million in the equity capital tranche of the Global Climate Partnership Fund, while the International Finance Corporation (IFC) will invest USD 75 million in the mezzanine and senior tranches. The Fund was founded in December 2009 as an initiative of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) and KfW Entwicklungsbank. It is the world’s first structured fund to provide refinancing resources to private local banks in developing and emerging countries for innovative and effective lines of credit for climate projects. The Fund’s resources are not comsumed; rather they are deployed on a rotating basis. This means that the resources from credit repayments are continually reinvested. What make a structured fund special are the different categories of risk within the fund. Public money serves as a risk buffer for private capital, feeding the equity capital tranches of the fund. This protection from risk means there are incentives for private capital investors to put money into the Global Climate Partnership Fund – even though it invests in both high-risk regions (developing, transition and emerging countries) and innovative sectors (financing of climate protection programmes).

The Fund is organised under private law and the fund manager is Deutsche Bank. The Fund currently stands at USD 200 million and is set to rise to USD 500 million within the next four years, mainly through the involvement of private investors. Being a project of the International Climate Initiative (ICI) the Fund mobilises additional private and public capital to finance climate-relevant investment projects.