Blended finance in emerging markets: who provides the concessional capital
83 matching capital sources on the AESFIP database · Last checked November 2026
Blended finance uses concessional money from donors, climate funds, foundations or development banks to make a deal attractive to commercial lenders and investors. The concessional layer may be cheaper debt, a first-loss tranche, a guarantee or a grant for preparation costs.
Every sponsor in an emerging market hears "you need blended finance" — few are told who actually provides it. This guide names the facilities on our database, explains which layer each one provides, and shows the practical route in. It covers Africa, Asia, Latin America and small island states.
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The four layers of a blended deal
Most blended structures combine some of the following:
- Concessional debt — longer tenors, grace periods or below-market rates from development banks and climate funds.
- First-loss or junior capital — the layer that absorbs losses before commercial investors.
- Guarantees and insurance — contingent cover for credit, currency or political risk.
- Grants and technical assistance — for feasibility, design and the costs commercial investors will not pay.
Who provides the concessional layer
On our database, the main providers fall into three groups. Climate funds such as the Green Climate Fund's Private Sector Facility and the Climate Investment Funds supply concessional capital through accredited partners. Development finance institutions — IDB Invest, FinDev Canada, FMO, Proparco and British International Investment among them — manage donor-funded blended windows alongside their own balance sheets. And dedicated vehicles such as the Climate Fund Managers platforms (Climate Investor One for renewable energy and Climate Investor Two for water, sanitation and oceans), the Emerging Africa & Asia Infrastructure Fund and EU ElectriFI are structured with a concessional tranche from the outset.
Regional facilities matter too: SEFA at the African Development Bank, the Africa Go Green Fund, and the UK-ASEAN Catalytic Green Finance Facility for Southeast Asia each target a defined pipeline.
How to access blended finance
Few blended facilities take unsolicited applications from early-stage projects. The usual route is through a lender, fund manager or development bank that already holds a concessional window. Lead with the commercial case, then show precisely which risk or cost the concessional layer would cover and why it is temporary.
Ask each fund whether it has a concessional or first-loss tranche. That is often what lets it accept smaller tickets, longer tenors or first-of-a-kind projects.
What screening teams look for
- Additionality — evidence the deal would not happen on commercial terms alone.
- Minimum concessionality — the smallest subsidy needed, not the largest available.
- A path to commercial sustainability once the risk is proven.
- Development and climate outcomes that can be measured and reported.
The funders
Each profile shows mandate, instruments and sector appetite. Verified contacts and application routes are available to members.
- Convergence Blended FinanceCatalytic & Enabling Capital · CanadaGlobal network for blended finance providing design funding, market data and deal matchmaking to vehicles mobilising private capital into emerging markets, with a heavy Africa pipeline.GrantsProject PreparationTechnical Assistance
- SEFA - Sustainable Energy Fund for AfricaBlended Finance Facility · Côte d'IvoireAfDB-hosted catalytic fund de-risking early-stage renewable energy projects.GrantsConcessional DebtEquity
- Climate Investor One (CIO)Climate FundClimate Investor One focuses on financing projects in low and lower middle income countries in the wind, solar, and hydro sectors with an average size of 25-75 MW or USD 80-100m in total investment cost. Climate Investor One consists of three stages: A Development Fund funded by non-repayable donor contributions would finance up to 50% of development costs for projects by private sector developers. Its specific aim would be to improve projects’ bankability from an early stage, which would include activities that projects often struggle to complete for lack of finance, such as help securing land titles and permits, concluding a power purchase agreement, conducting an environmental and social impact assessment, and reaching financial close by securing 100% of investment costs. The donor capital used to fund this stage would be converted to equity stakes for successful projects that would in turn be bought out by the Construction Finance Facility at commercial rates. In this way, the Development Facility would be an evergreen facility, recycling the returns made from the construction finance facility buy-outs to fund the development of subsequent new projects. A Construction Fund would provide up to 75% of investment costs on commercial terms to projects. It would be funded by three different tiers representing different risk/return positions: A $100m Tier 1 donor tranche to cover potential losses; a $200m Tier 2 subordinate tranche taken up by DFIs and potentially PE/commercialConcessional DebtDebtTechnical Assistance
- Climate Investor Two (CI2)Climate FundClimate Investor Two (CI2) is a blended finance facility, delivering water, sanitation, and oceans infrastructure projects in emerging markets. Established in 2019, the fund reached its third close on 2 November 2023 with USD 875 million in commitments and is targeting a final close of USD 1 billion by March 2025. CI2 employs a mix of public and private-sector funding as well as commitments from development finance institutions (DFIs), all in mutually beneficial and complementary ways. More details about the CI2 can be found here. This page provides an overview of Climate Investor Two. For more information on CI2's Development Fund, click here.Concessional DebtDebtTechnical Assistance
- Emerging Africa & Asia Infrastructure FundBlended Finance Facility · United KingdomThe Emerging Africa & Asia Infrastructure Fund provides long-term commercial debt to deliver infrastructure projects across Africa and Asia. It primarily finances private-sector infrastructure projects to establish new facilities or expand existing operations.DebtMezzanine
- EU ElectriFIProgramme Window · BelgiumEuropean Union impact financing facility investing early-stage risk capital in energy access and renewable generation companies and projects in developing countries.Concessional DebtEquityMezzanine
- Africa Go Green FundBlended Finance Facility · NetherlandsAfrica Go Green Fund provides senior debt, mezzanine financing, and guarantees to support energy efficiency and renewable energy projects across Africa. It targets private sector entities including corporate and industrial developers, SMEs, and independent power producers, as well as local financial institutions.DebtConcessional Debt
- Catalytic Climate Finance FacilityBlended Finance Facility · CanadaFacility hosted by Convergence that funds the design and scale-up of blended finance vehicles mobilising private capital for climate action in emerging markets.GrantsTechnical AssistanceCatalytic Capital
- UK-ASEAN Catalytic Green Finance Facility Trust Fund (UK-ACGF)Climate FundThe United Kingdom–ASEAN Catalytic Green Finance Facility (UK-ACGF) is a single-partner trust fund established in March 2023 under the ASEAN Catalytic Green Finance Facility (ACGF), a facility of the ASEAN Infrastructure Fund (AIF). The objective of the UK-ACGF fund is to support developing member countries in Southeast Asia to transition to low-carbon and climate-resilient development pathways. The objective of the facility is to accelerate the development of green infrastructure by better utilizing public funds to create bankable projects and catalyze private capital, technologies, and management efficiencies. It is managed by ADB’s Southeast Asia Green Finance Hub.Concessional DebtDebtGrants
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Showing 9 of 83 matching capital sources. The remaining 74 — including their verified routes, ticket sizes and eligibility criteria — are reserved for members.
Common questions
- What is blended finance?
- The strategic use of concessional public or philanthropic capital to attract commercial investment into projects that would otherwise be too risky or too small for private investors alone.
- Who provides blended finance in developing countries?
- Climate funds, development finance institutions, multilateral development banks, donor governments and foundations — usually through dedicated facilities or fund tranches rather than direct grants to projects.
- Can a small business access blended finance?
- Usually indirectly: by borrowing from a bank or raising from a fund that already has a concessional or first-loss layer.
- Is blended finance the same as concessional finance?
- No. Concessional finance is one ingredient. Blended finance is the structure that combines concessional and commercial capital in the same deal.
Related guides
Official sources: Convergence — Blended finance · OECD — Blended finance principles. Reviewed by the iSustain Global research team against funders' published criteria.