Allianz Global Investors has launched a $1bn (£742.1m) emerging markets credit fund, anchored by public and private capital for climate-related initiatives.
The Allianz Credit Emerging Markets fund is a blended finance vehicle designed to support the goals of the Paris Agreement.
Allianz, which manages €562bn (£489bn) in assets under management, has so far secured $690m in capital for the fund.
Development finance institutions (DFIs), including British International Investment (BII) and multilateral development banks (MDBs), will provide $150m of concessional capital for the junior tranche of the fund. “This will significantly reduce volatility and support the return expectations for private investors”, the BII said, with a final close targeted at $1bn.
Allianz SE and Swiss pension provider GastroSocial Pensionskasse have acted as anchor investors for the senior tranche of the fund.
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“This strategy is a great example of the strength and power of collaboration between the public and private sector and the significant potential for further scale in this asset class,” said Edouard Jozan, head of private markets, AllianzGI. “Leveraging our longstanding partnerships with DFIs and MDBs, we aim to deliver investors with both attractive returns and measurable positive outcomes.”
According to Allianz, BII will contribute $40m of the $150m junior tranche, alongside Global Affairs Canada, the Inter-American Development Bank Invest, the Swedish International Development Cooperation Agency and Impact Fund Denmark.
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“At BII we recognise that we must use our scarce concessionary capital to unlock the vast pools of private finance that is required to meet the global challenge of the climate emergency and drive sustainable, impact-led growth in some of the least developed countries in the world,” said Leslie Maasdorp, chief executive of BII.
A significant proportion of the fund’s disbursements is expected to be allocated to Africa, with the remainder split across emerging economies in other regions. Investments will span a range of sectors, including renewable power, clean transport, agriculture and financial services.
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