If one’s objective is to mobilise capital to solve planetary and societal issues, then blended finance should be a useful tool. To date, however, its take-up has been hampered by a lack of understanding or standardisation, with each new structure being put together from the ground up, as we reported last year.
In a bid to remedy this, two organisations have come up with five “archetypes” of blended finance vehicles, breaking down the structure, type of relevant investor, waterfall and possible variations for each.
The report is a collaboration between development finance institution British International Investment and consultant BCG. In order to sort the “Pioneering Impact Equity” funds from the “High-Yield Mobilisation” funds, the two organisations analysed 65 recently launched blended finance funds.
“While not rigid structuring templates, they provide a practical reference for fund managers and investors to design, assess and capitalise blended vehicles more efficiently,” the authors write.
The report also includes a scorecard to assist LPs and GPs in evaluating whether the structure of a blended finance vehicle is appropriate for its objectives and balances stakeholder priorities well.
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