Finland-LAC Blended Finance Fund

Description What is done in the programme or project and why, what results are pursued, who benefits from the activities and who are involved in the implementation.

Finland will make 50 million euro investment as development policy investment in a Climate Fund established by Finland and IDB Invest. The purpose of the fund will be to catalyze greater private investment in climate change mitigation and adaptation in Latin America and the Caribbean (LAC) by providing concessional financing to select private sector projects. Investments are particularly focused on low income and lower middle income countries as well as small island countries. Some investments can be made in upper-middle income countries outside of the small island states, subject to the fulfillment of specific criteria. The investments will be targeted particularly at Central America and Caribbean region, which suffers from climate change and has remarkable funding gap for climate investments. Examples of projects that may receive concessional financing with resources of the Fund include but are not limited to renewable energy generation, energy efficiency measures, sustainable transport solutions, sustainable agriculture and land-use changes, as well as projects that increase resilience and contribute to the adaptation to climate change vulnerabilities. The Fund is expected to have, when possible, a cross-sectorial focus on poverty reduction; gender equality, diversity and inclusion as well as on biodiversity. The concessional financings may include debt instruments, mezzanin funding, guarantees and risk mitigation instruments, and/or equity investments, among other financial instruments offered by IDB Invest. The expected duration of the Fund will be 25 years. The first 5 years are investment period, during which resources of the Fund will be allocated. The reimbursement period will start after 5 years. Reimbursements will be made after exiting each investments.