Climate Fund Managers Appointed Investment Manager of GAIA LP, a USD1.5bn target climate-focused emerging market private debt platform; and Pollination appointed Advisor to the Investment Manager of GAIA LP
Dubai, 4 December 2023: Today at COP28, Climate Fund Managers (CFM), a Dutch-based climate-centric blended finance and EU licensed investment fund manager (AIFM), announced their appointment as AIFM of GAIA LP (GAIA), a USD 1.48 billion target private debt blended finance platform focused on climate adaptation and mitigation in emerging markets. CFM, as AIFM, has appointed Pollination, a global advisory firm focused on climate and nature, as Strategic Advisor to the AIFM. The appointments mark a leap forward in the mobilisation of private sector capital at scale to address the climate crisis, fostering resilience, protecting biodiversity and positively impacting an estimated 20 million people across 25 developing countries and island states.
GAIA is targeting a first close of USD 500 million in Q2 2024 raised from international investors across both public and private sectors, with a target final close of USD 1.48 billion within 24 to 36 months. It will have a fund life of 30 years with a 15-year investment period thereby allowing for a capital recycle and greater positive impact.
GAIA was established to address many of the barriers that hinder private investment in climate-resilient projects in emerging markets. GAIA is supported by multiple public and private sector organisations, including fund sponsors and co-founders Mitsubishi UFJ Financial Group (MUFG) and Development Finance Institute Canada (FinDev Canada). GAIA will strive to ensure that country ownership is prioritised and aligned with national climate objectives and local circumstances. It will play a vital role in protecting biodiversity and promoting the social and economic development of local communities.
Together, MUFG and FinDev Canada plan to co-invest circa USD 440 million alongside other leading financial institutions including the UN Green Climate Fund, which in October 2023 approved a USD 152 million equity investment in GAIA. In turn, GAIA will provide loans, credit facilities and private bonds to sovereign, sub-sovereign and quasi-sovereign borrowers. The blended capital structure will include junior equity and senior debt.
CFM CEO Andrew Johnstone and FinDev Canada CEO Lori Kerr made the announcement during a panel on “Innovative Adaptation Finance” this afternoon at COP28 in Dubai.
Lori Kerr, CEO of FinDev Canada, said: “CFM’s experience in raising and deploying blended capital in high-impact climate projects is well recognized. Pollination has a proven track record designing, building, and investing in solutions for adaptation, mitigation, and community development. Together, they provide a critical link for all of us at GAIA to begin implementation of this ambitious and innovative platform, catalyzing the transition towards a sustainable, resilient, and inclusive global economy.”
Fumitaka Nakahama, Global Head of Corporate & Investment Banking Business Group, MUFG, said: “Climate finance distribution remains largely concentrated in developed economies, leaving emerging and frontier economies underrepresented and vulnerable. Under the stewardship of CFM and Pollination, GAIA will increase access to critically needed funding in these markets, increasing community resilience to climate impacts and redefining the climate finance landscape.”
Andrew Johnstone, CEO of CFM said: “To achieve net-zero emissions by 2050, clean energy investment in emerging economies must triple to approximately USD 3 trillion annually by 2030. This far exceeds the capacity of the public sector. Blended finance strategically deploys public capital to mitigate risk, facilitating private investment. GAIA’s blended model not only opens the door for institutional investors but also tackles regulatory constraints that have historically restricted their involvement in emerging economies with sub-investment grade debt. It will play a key role in supporting emerging markets’ transition to low-carbon and climate-resilient growth.”
John Morton, Head of the Americas, Pollination said: “In the face of escalating climate challenges, our firms’ collective commitment to adaptation and resilience has never been more urgent. Through this unique partnership, we are able to draw on the best of each organisation to catalyse private investment for high-impact, hard-to-reach projects that safeguard critical infrastructure, agriculture, water resources, and biodiversity. By encouraging nature-positive solutions, we seek to safeguard against climate risks and actively nurture the foundation of resilient economies and thriving communities.”
GAIA will target 25 emerging market countries in Latin America, Africa and Asia with a focus on Least Developed Countries (LDCs) and Small Island Developing States (SIDS). The focus will be 70% climate adaptation (food, water and health security, infrastructure and public works, ecosystems, and biodiversity resilience) and 30% climate mitigation (transport and industry electrification, mass transportation and green buildings).
Notes to Editors
About Climate Fund Managers (CFM):
Climate Fund Managers (CFM) is a leading climate-centric blended finance fund manager. It raises and deploys climate finance funds in partnership at scale and at pace. Through its award-winning model, CFM has created a blueprint for a new generation of climate financiers, whose collective impact can help end the climate crisis. CFM currently manages two emerging market infrastructure funds focused on climate change mitigation and adaptation: Climate Investor One, a c.1 billion USD fund focused on renewable energy, and Climate Investor Two, a c.1 billion USD fund focused on water, sanitation and oceans infrastructure. CFM is currently implementing further blended finance initiatives in the green hydrogen, power transmission and cities sectors focused on development, equity, debt and guarantee financial instruments. Established in 2015, CFM is a joint venture between the Dutch development bank, FMO, and Sanlam InfraWorks, part of the Sanlam Group of South Africa with offices in The Hague, Cape Town, Singapore and Bogota. For more information, see www.climatefundmanagers.com.
Pollination is a global investment and advisory firm focused on climate and nature. It designs, builds and invests in climate and nature solutions to accelerate the transition to a net-zero, nature-positive future. Established in 2019, Pollination has brought together a global team of over 200 leading experts from across the climate and nature ecosystem; spanning finance, investment, technology, business, law, policy and science. Leveraging unique market insights, it supports clients to navigate the transition, and designs investment platforms and funds to meet investor needs and deliver real impact. For more information, see www.pollinationgroup.com.
Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the world’s leading financial groups. Headquartered in Tokyo and with over 360 years of history, MUFG has a global network with approximately 2,000 locations in more than 50 countries. The Group has about 160,000 employees and offers services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management, and leasing. The Group aims to “be the world’s most trusted financial group” through close collaboration among our operating companies and flexibly respond to all of the financial needs of our customers, serving society, and fostering shared and sustainable growth for a better world. MUFG’s shares trade on the Tokyo, Nagoya, and New York stock exchanges. For more information, visit https://www.mufg.jp/english.
About FinDev Canada:
FinDev Canada is Canada’s bilateral Development Finance Institution (DFI), supporting development through the private sector. We provide financing, investment, and blended finance solutions, as well as technical assistance and knowledge, to promote sustainable and inclusive growth in emerging markets and developing economies (EMDEs) aligned with the Sustainable Development Goals (SDGs) and Paris Agreement commitments. FinDev Canada is a wholly owned subsidiary of Export Development Canada (EDC). Find out more about FinDev Canada at www.findevcanada.ca.
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