The International Finance Corporation (IFC), a member of the World Bank Group, and Amundi, an European asset manager, have raised $436 million to support green, resilient, inclusive recovery in emerging markets
In a statement, IFC announced the final closing of the Sustainable Emerging Economy Development Debt (SEED), a sub-fund of Amundi Planet II, SA SICAV-RAIF.
Launched in 2021, the fund has raised $436 million from institutional investors, including IFC, Alecta, Cassa Depositi e Prestiti (CDP), and APK-Pensionskasse.
The fund aims to mobilize private investment in emerging market sustainable bonds, with the objective of promoting a green, resilient, and inclusive economic recovery.
According to the statement, the initiative is intended to help to expand the availability of and demand for underdeveloped segments of the sustainable bond market, strengthening the asset class and driving greater resources towards priority areas such as climate mitigation and gender equality.
The capital structure seeks to limit the risk for commercial investors who might be otherwise averse to investing in impact-oriented bonds on their own, particularly in less developed markets.
In addition to mobilizing much needed capital, the strategy provides a new model for other asset managers and institutional investors to replicate, further amplifying its impact.
“This Fund underscores the growing interest in sustainable bonds as well as their resilience in the face of global economic uncertainty,” said Tomasz Telma, Director and Global Head of IFC’s Financial Institutions Group.
“Innovative financing solutions such as the SEED fund enable greater mobilization of private sector capital to emerging markets, aiming to address a massive financing gap and channeling resources to meet global challenges,” he added.
Jean-Jacques Barbéris, Head of the Institutional and Corporate Clients Division and environmental, social, and governance (ESG) at Amundi, added they are proud to play a leading role in responsible finance together with the IFC, tackling key challenges such as inequality and climate change.
“This Fund is a great example of the benefits of public-private partnerships in creating new markets trying to help addressing financing gaps in regions where funding is most needed,” he said.
Tony Persson, Head of Fixed Income and Strategy at Alecta, said the investment gives Alecta an opportunity to support a more sustainable development by encouraging the issuance of green, social and sustainability-linked bonds in emerging markets.
“The fund is building on Amundi’s prior experience from green bond issuance, with Amundi Planet, SICAV-SIF – Emerging Green One as a proof of concept for catalyzing green finance in emerging markets,
“This is an example of Alecta’s ambition to combine attractive returns and positive impact for our beneficiaries,” he added.
Paolo Lombardo, Head of International Cooperation for Development at CDP, said they are pleased to join an initiative aimed at fostering high-impact investments in our strategic partner countries.
“The promotion and expansion of green and sustainable bonds within financial markets present an invaluable opportunity to boost investments in critical sectors such as green and social infrastructures,
“These initiatives are indispensable for nurturing the sustainable development of emerging markets,” he added.
Poul Thybo, Head of Investment at APK, said that in terms of sustainability matters, many issuers from emerging markets are currently not in compliance with their ESG standards.
“Disengagement or divestment will not change that fact,
“This investment by APK is a perfect example of how we can promote positive change in emerging markets while at the same time securing attractive returns for our beneficiaries,” he added.
According to the statement, the fund requires that investments comply with International Capital Markets Association Principles (ICMA) governing sustainable bonds and will implement review mechanisms and impact reporting to ensure such investments are aligned with the strategy’s goals.
The strategy contributes to IFC’s commitments under the World Bank Group’s Climate Change Action Plan.
To extend the reach into low-income countries, the International Development Association’s Private Sector Window (IDA PSW) is providing a partial credit guarantee through its blended finance facility.
To further support the strategy, a technical assistance facility was designed to increase the quality and quantity of sustainable bond issuance in emerging markets, deepening market awareness and strengthening best practices across the industry.
IFC is the largest global development institution focused on the private sector in emerging markets.
In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises.
A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages more than €2 trillion of assets ($2.13 trillion).
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