Impact manager BlueOrchard and the UK development finance institution British International Investment (BII) have partnered to launch a $250m (£189.7m) climate finance fund.
BII will anchor the BlueOrchard Climate Action Mobilisation Fund (BOCAMF), with both firms targeting investment from insurance companies as the strategy is structured to meet UK Solvency II requirements.
The fund will primarily provide senior loans to banks, microfinance providers and other intermediaries offering climate finance to small and medium-sized enterprises in emerging markets.
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BOCAMF features both junior and senior equity tranches, while the senior notes tranche is structured to achieve an investment-grade rating. The fund is also focused at other commercially and impact-minded investors.
“The only chance we have of meeting the monumental funding demands of the climate emergency is to mobilise private capital at scale,” said Leslie Maasdorp, chief executive of BII. “Today’s announcement demonstrates how British development finance, working with a leading private institution, can forge a new path in getting capital to where it is needed most.”
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The fund follows BlueOrchard’s selection as a winner of BII’s mobilisation initiative, launched earlier this year to scale climate finance in developing economies. The initiative ringfenced £50m from a £100m mobilisation facility announced by prime minister Sir Keir Starmer at last year’s UN General Assembly.
“This mandate allows us to unlock new sources of private capital for climate action through innovative blended finance structures, designed specifically for insurers and institutional investors,” said Michael Wehrle, chief executive of BlueOrchard.
The fund remains subject to final legal and policy approvals from BII.
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