Blended Finance

Blended Finance focuses on structuring risk-tiered vehicles where commercial investors take a senior position. These vehicles co-invest alongside Development Finance Institutions in high impact emerging markets loans. The highly diversified loan portfolios, combined with the first loss protection at a vehicle level, means commercial investors’ participation in the vehicle can be akin to investment grade.

The value proposition
Through partnerships with Development Finance Institutions, investors access a new set of investments traditionally funded by development capital. Historically the investments have yielded stable returns as a result of prudent structuring and the halo effect of development banks. These returns have tended to have a low correlation to public emerging markets bond indices.
$4.2 trillion of additional annual global investment is needed to achieve the SDGs. Through blending and de-risking, commercial investors are able to allocate significant amount of capital towards sizable vehicles.
By blending public and philanthropic capital together with commercial capital into risk-tiered structures, the goal is to achieve an attractive risk-return profile for all stakeholders.
Blended investments focus on sectors with the highest impact on social and economic growth such as infrastructure, energy and agribusiness.

IFC Case Study

(For illustrative purposes only. This information contained herein is solely for educational purposes and should not be relied upon as a forecast, research or investment advice and is not a recommendation to adopt any investment strategy. Any vehicle mentioned herein is closed for external investors.)

IFC Case Study - Partnership

In 2017, Allianz Group and the International Finance Corporation (IFC), a member of the World Bank Group, launched a partnership under the Managed Co-Lending Portfolio Program (MCPP).

Allianz insurance companies committed $500 million in a vehicle, managed by Allianz Global Investors, to co-invest alongside the IFC in infrastructure projects in emerging markets worldwide. The vehicle has preferred access to invest in all IFC loans which fulfil a strict set of eligibility criteria.

The vehicle is risk-tiered and, as such, Allianz investors have a preferred return and IFC takes the first loss on investments up to their committed capital. Furthermore, the Swedish Development Agency (SIDA) provides a guarantee to IFC for part of the first loss funding.

In 2017, Allianz Group and the International Finance Corporation (IFC), a member of the World Bank Group, launched a partnership under the Managed Co-Lending Portfolio Program (MCPP).

Allianz insurance companies committed $500 million in a vehicle, managed by Allianz Global Investors, to co-invest alongside the IFC in infrastructure projects in emerging markets worldwide. The vehicle has preferred access to invest in all IFC loans which fulfil a strict set of eligibility criteria.

The vehicle is risk-tiered and, as such, Allianz investors have a preferred return and IFC takes the first loss on investments up to their committed capital. Furthermore, the Swedish Development Agency (SIDA) provides a guarantee to IFC for part of the first loss funding.

IFC Case Study - Benefits to Allianz investors

The Partnership allows Allianz investors to leverage the IFC’s track record, local presence, halo effect, and impact investment expertise. In addition, the first loss de-risks the senior investment to achieve investment grade characteristics and increases its capital efficiency compared to single direct loans, which enables Allianz investors’ commitment to a large scalable vehicle.

IFC Case Study - Benefits to IFC, SIDA and target emerging markets

The Partnership achieves significant commercial capital mobilization, which is a key goal for public capital and Development Finance Institutions, and it is targeted towards much needed, high impact infrastructure projects.

  • Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Investing in the water-related resource sector may be significantly affected by events relating to international political and economic developments, water conservation, the success of exploration projects, commodity prices and tax and other government regulations. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.

    The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted.

    This material has not been reviewed by any regulatory authorities. In mainland China, it is used only as supporting material to the offshore investment products offered by commercial banks under the Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations. This document does not constitute a public offer by virtue of Act Number 26.831 of the Argentine Republic and General Resolution No. 622/2013 of the NSC. This communication's sole purpose is to inform and does not under any circumstance constitute promotion or publicity of Allianz Global Investors products and/or services in Colombia or to Colombian residents pursuant to part 4 of Decree 2555 of 2010. This communication does not in any way aim to directly or indirectly initiate the purchase of a product or the provision of a service offered by Allianz Global Investors. Via reception of his document, each resident in Colombia acknowledges and accepts to have contacted Allianz Global Investors via their own initiative and that the communication under no circumstances does not arise from any promotional or marketing activities carried out by Allianz Global Investors. Colombian residents accept that accessing any type of social network page of Allianz Global Investors is done under their own responsibility and initiative and are aware that they may access specific information on the products and services of Allianz Global Investors. This communication is strictly private and confidential and may not be reproduced. This communication does not constitute a public offer of securities in Colombia pursuant to the public offer regulation set forth in Decree 2555 of 2010. This communication and the information provided herein should not be considered a solicitation or an offer by Allianz Global Investors or its affiliates to provide any financial products in Brazil, Panama, Peru, and Uruguay. In Australia, this material is presented by Allianz Global Investors Asia Pacific Limited (“AllianzGI AP”) and is intended for the use of investment consultants and other institutional/professional investors only, and is not directed to the public or individual retail investors. AllianzGI AP is not licensed to provide financial services to retail clients in Australia. AllianzGI AP (Australian Registered Body Number 160 464 200) is exempt from the requirement to hold an Australian Foreign Financial Service License under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order (CO 03/1103) with respect to the provision of financial services to wholesale clients only. AllianzGI AP is licensed and regulated by Hong Kong Securities and Futures Commission under Hong Kong laws, which differ from Australian laws.

    This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors U.S. LLC, an investment adviser registered with the U.S. Securities and Exchange Commission; Allianz Global Investors Distributors LLC, distributor registered with FINRA, is affiliated with Allianz Global Investors U.S. LLC; Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG; Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; Allianz Global Investors Japan Co., Ltd., registered in Japan as a Financial Instruments Business Operator [Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424, Member of Japan Investment Advisers Association and Investment Trust Association, Japan]; and Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan.