CLIMATE FINANCE ACCELERATOR NIGERIA Webinar 2 Finance

Transcription

1 CLIMATE FINANCE ACCELERATOR NIGERIA Webinar 2 Finance

2 Introduction Hans Verolme

3 Climate Finance Accelerator Nigeria Webinar 2 - Agenda Introduction Hans Verolme How to ask questions Attracting Private Capital through Blended Finance Lauren Carter Blended Finance Daniel Rossetto Climate Mundial Q&A

4 Climate Finance Accelerator Nigeria Lauren Carter Daniel Rossetto Lauren Carter is a climate finance specialist based in Geneva who runs Invest4Climate, a joint UNDP and World Bank initiative to crowd-in private investment for climate action in developing countries. Prior to joining UNDP, she developed the private sector engagement strategy for the Green Climate Fund s Private Sector Facility in partnership with the Centre for Clean Air Policy and Climate Finance Advisors. Lauren also served as the Director of Climate Finance Initiatives for a boutique advisory in Morocco where she guided the government s engagement with the Green Climate Fund and other sources of climate finance. Working with government ministries, multilateral development banks and private investors, she developed a pipeline of bankable climate projects across the low-carbon transport, renewable energy, energy efficiency, agriculture and land use sectors. Lauren is also a specialist in private sector accreditation to the Green Climate Fund. Daniel Rossetto is Chief Executive of Climate Mundial; one of the premier private sector climate finance and sustainable development firms. Daniel has pioneered on Paris Climate Bond (PCB) concept development with the UNFCCC; a financing concept that is now being applied to fund registered projects across many countries including The Gambia, Kenya, the Philippines and Ghana. Climate Mundial is engaged in a global partnership with UNDP, which includes support to developing counties to raise finance for NDCs. Daniel was author of a 2018 report for the Energy Commission of Nigeria on domestic financial sector reforms to support grid connected renewable energy investment. Prior to founding Climate Mundial, Daniel was Executive Director for Environmental Markets at J.P. Morgan Chase.

5 The How to ask questions slide Please submit your question using the panel on the right. Attendee control panel If your panel is minimised, click the orange button to expand it. Type your question here

6 Attracting Private Capital through Blended Finance Lauren Carter

7 Attracting Private Capital through Blended Finance CLIMATE FINANCE ACCELERATOR: NIGERIA JANUARY 2019 L. Carter Consulting, LLC

8 Principles of blended finance Definition Blended finance is the strategic use of catalytic capital from public and philanthropic sources to mobilize additional private sector investment for sustainable development in emerging markets. Key Characteristics Financial Return Public Investment or Philanthropic Investment is Catalytic Addresses 1 or more Sustainable Development Goals (SDGs) Purpose Blended finance allows organizations with different objectives to invest alongside each other while achieving their own objectives (whether financial return, social impact, or a blend of both). L. Carter Consulting, LLC

9 Blended finance allows different types of investors to invest alongside each other while achieving their own objectives

10 Nigeria s Climate Ambitions Nigeria estimates in it s 2015 INDC that financing its NDC ambitions will cost $142 billion USD while achieving $304 billion in economic benefits Nigeria aims to have 13 GWs in off-grid solar in addition to improving the electricity grid Blended finance investors (especially public or philanthropic funders) usually want to align their investments to country priorities and policies (see Nigerian NDC) L. Carter Consulting, LLC Source: Nigerian Government

11 State of Blended Finance Region L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

12 State of Blended Finance Deal Size 314 Deals in 2017 More than $100 billion mobilized to date Median ticket size is $56 million Largest percentage of deals are between $10 25 million L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

13 State of Blended Finance Deal Type Funds Most common (55%) Includes equity funds, debt funds, and funds-of-funds Projects Large deals Usually infrastructure Companies Often SMEs or Social Businesses in need of early stage grant funding and capacity building Facilities Bonds / notes L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

14 State of Blended Finance Energy L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

15 Example Structures for Blended Finance L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

16 1 2 3 L. Carter Consulting, LLC Source: A Resource for Structuring Blended Finance Vehicles, The GIIN

17 Case Studies for Blended Finance Blended concessional finance can address a variety of development issues without demanding market-level compensation, for example by providing: More risk capital in the form of equity, subordinated loans, or preferred shares to improve the risk profile for senior lenders. Below market interest payments to improve the overall project profitability Partial credit guarantees to lower risk for lenders and ensure an appropriate risk-adjusted return to the project. Portfolio risk sharing to reduce the risk of losses for bank or fund portfolios (e.g. for SMEs). Below market loans to provide liquidity and cost support for banks to support excluded high cost/high risk segments (e.g. female entrepreneurs) Guarantees and credit enhancements for fund structures to mitigate risk and attract institutional investors. Grants that provide critical investment support in high risk situations or address higher initial costs with innovative technologies. L. Carter Consulting, LLC Source: DFI Working Group on Blended Concessional Finance for Private Sector Projects

18 Blending Approaches Different types of deals require different blending approaches: Funds most commonly benefit from concessional capital and technical assistance funds; Projects are most likely to receive a guarantee complemented by technical assistance; and Companies (often social enterprises) are most likely to receive concessional capital or design-grant funding for business model proof of concept or improvement. L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

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21 Sources of Blended Finance Nigeria/Energy/Ag Funds Meridiam Infra Africa Fund Axepoint Capital MPC Capital China Africa Development Fund Macquarie Actis Climate Investor One Africa Infrastructure Investment Managers Family Offices Wye Holdings Platforms Climate Place IRENA Project Navigator Convergence

22 Annex Blended Finance Funders Guidelines for Blended Finance Structure by Instrument Additional Resources Questions L. Carter Consulting, LLC

23 Blended Finance Funders L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

24 Blended Finance Funders Public Investors with Development Mandates L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

25 Blended Finance Funders DFIs and MDBs L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

26 Blended Finance Funders Impact Investors L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

27 Blended Finance Funders Private Investors L. Carter Consulting, LLC Source: State of Blended Finance 2018, Convergence

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32 Additional Resources DFI Working Group on Blended Finance OECD DAC Blended Finance Principles State of Blended Finance, Convergence A Resource for Structuring Blended Finance Vehicles, The GIIN Making Blended Finance Work for the Sustainable Development Goals

33 Questions Key challenges in accessing capital? What instruments or resources are you looking for?

34 Blended Finance Daniel Rossetto Climate Mundial

35 Q&A