BlackRock Says Blended Finance at ‘Turning Point’ as Deals Grow
BlackRock Inc. says the market for blended finance has now reached a “turning point,” as it targets growth in deals that combine private and public funding.
The $10 trillion asset manager is focused on “building up our suite of blended finance instruments” as well as public-private partnerships, Heidi Yip, BlackRock’s head of sustainable and transition solutions for Southeast Asia, said at the Singapore Carbon Market & Investor Forum on Friday.
Such deals can help lower risks for private investors in emerging markets, which can “bring more infrastructure projects into the pipeline,” Yip said.
Blended finance was developed to help pay for measures needed to address climate change across the globe, particularly in poorer countries. Deals are generally structured so that public investors such as multilateral development banks provide de-risking measures like guarantees, in an effort to entice private money.
Last year, the market for combining private and public funding deals hit a five-year high of $15 billion. Several banks are currently exploring new blended finance structures to scale deals, including Mitsubishi UFJ Financial Group Inc., which has established a $1.5 billion facility.
As damage from climate catastrophes and physical climate risks grows, “adaptation finance is definitely going to be the next area that investors need to focus on right now,” Yip added.
With institutions working on adaptation taxonomies and defining what qualifies as an adaptation project, “we are actively looking out for where there’s investor interest,” she said. “You can build out a portfolio of adaptation-aligned assets based on the framework that we work out collaboratively.”
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