AllianzGI’s SDG Loan Fund mobilises $1.1bn of investor capital

Written by Michael Griffiths

01/12/2023

Allianz Global Investors (AllianzGI) has announced that the SDG Loan Fund has successfully mobilised over $1.1bn in private capital to advance the United Nations Sustainable Development Goals (SDGs) in emerging and frontier markets.

Capital for the fund is provided by a group of institutional investors, including Allianz, the Dutch development bank FMO, and Skandia.

Initially conceived by AllianzGI, the fund’s manager, and FMO Investment Management, the portfolio manager, the fund’s structure includes a “first-loss” investment from FMO and a partial, unfunded guarantee from the Catherine T. MacArthur Foundation.

The fund’s “blended finance” structure enables institutional investors to co-invest in a portfolio of loan participations that support financial institutions and intermediaries serving small and medium-sized businesses in low and moderate-income countries across Latin America, Asia, Africa, and Eastern Europe. The fund also targets three sectors which are energy, financial institutions, and agribusiness.

“We understand that blended finance has a crucial role to play in unlocking the private capital needed to spur development in emerging and frontier markets,” said global head of investments at AllianzGI, Deborah Zurkow.

“Our partnership approach with FMO and the MacArthur Foundation has led to the creation of a compelling example of a concrete, innovative, market-led approach to mobilising that capital at scale, helping ensure high-impact projects vital to the green transition receive the financing they need.

“We firmly believe the SDG Loan Fund will act as a blueprint for successful multi-stakeholder collaboration, which we hope to see many more examples of in the future.”

The fund is designed to address the urgent need for capital to reach the SDGs in developing countries. Once fully invested in approximately 100 high-impact loan participations, the fund aims that its investments will support close to 60,000 jobs and to avoid approximately 450,000 metric tonnes of carbon dioxide per annum, according to FMO’s analysis.

Furthermore, the fund is expected to have a running start, with FMO warehousing approximately $100m of eligible loans.

Managing director at FMO IM, Nic Wessemius, said: “The capital pooled together through this blended finance structure is a demonstration that a shared vision to address the SDGs can result in finding solutions for very different types of investors.

“The fund will allow FMO to provide more capital to its customers, supporting our shared mission to enhance local prosperity in developing countries globally. We are confident that together with Allianz Global Investors, we will ensure the fund’s success in selecting and managing an impactful portfolio.”

Managing director of impact investments at the MacArthur Foundation, Debra Schwartz, added: “By filling critical funding gaps and fuelling economic, environmental, and social benefits for tens of thousands of small businesses, families and communities, the Fund will demonstrate the power of catalytic capital to unlock investment and impact that would not otherwise be possible.”

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