Delivering on the Sustainable Development Goals (SDGs)—an ambitious agenda for improving people’s lives and the planet’s future by 2030—requires more resources than are currently devoted to development.
In fact, the annual investment gap for meeting those goals is $2.5 trillion per year, according to United Nations estimates. Blended finance is a strategic tool to bridge that gap by catalyzing private capital towards projects with a high development impact.
Blended finance is the targeted use of concessional funding in high-impact projects in which actual or perceived risks are too high for commercial finance alone. For instance, a project may be sound economically but struggle to access commercial capital because of lack of familiarity in a given technology, limited market track record, uncertain revenue stream or inadequate contractual arrangements
IDB Invest uses blended finance to pioneer, de-risk and mainstream innovative business models and technologies to deliver development and social impact in Latin America and the Caribbean.
We provide comprehensive blended finance solutions by combining concessional resources with our own commercial funding through a wide array of financial instruments. These include:
- debt (such as senior or subordinated loans at softer terms and conditions)
- equity (patient equity in early-stage, high-impact enterprises)
- risk mitigation instruments (aggregation platforms and first-loss guarantees to mobilize institutional investors)
- financial incentives (such as gender performance-based incentives for achieved and verified results)
In addition, we complement our financial offering with non-financial products and advisory services.
With over $800 million of donor funds under management for blended finance, IDB Invest has a long-standing expertise in channeling partners’ concessional resources to the private sector in Latin America and the Caribbean.
As an institution, we rely on strong internal controls and dedicated teams that ensure a disciplined, efficient and high-impact use of our partners’ concessional resources.
As a strategic lender in the region, we use our loans to open up new possibilities for companies to add value, take risks and test new business models.