Climate Investor Two, which invests in water, waste and oceans infrastructure, is now the world’s largest climate adaptation infrastructure fund focused on emerging markets.
Dutch blended finance fund manager Climate Fund Managers (CFM) has announced a final close of its Climate Investor Two fund (CI2) after raising $1.065bn (€920m), surpassing its original target by $65m.
Founded in 2019, CI2 blends public and private capital to invest in and co-develop water, waste and oceans infrastructure projects in emerging markets across Africa, Asia and Latin America. It attracted $190m in new commitments plus a €205m guarantee from the EU in its latest funding round.
The Hague-based CFM is a joint venture between Dutch development bank FMO and Sanlam InfraWorks, which is part of South Africa’s Sanlam group, and was set up to invest in renewable energy in the developing world. CFM uses blended finance strategies to invest in climate-resilient solutions in emerging economies.
Since its inception in 2019, the fund has attracted a diverse investor base including development finance institutions, multilateral finance institutions, public sector banks and institutional investors – including asset managers, pension funds and insurers.
Bridge to bond mechanism
Bond investors allocated to the fund through the introduction of a so-called bridge-to-bond mechanism, according to CFM. The mechanism consists of a bridge loan by Sanlam covered by a guarantee from the European Commission.
“While climate mitigation remains critical in the race to end the climate crisis, adaptation must be an equal priority. Closing Climate Investor Two at more than $1bn in a challenging environment is a major milestone that highlights investor appetite for adaptation and our ability to structure compelling opportunities in this space,” said Andrew Johnstone, CEO of CFM.
“Our partnership with CFM since 2017 enables us to respond to the world’s urgent climate crisis, particularly in developing economies. We are proud to have facilitated this innovative and landmark financing model for the close of CI2 and look forward to the impact these funds will have for those who need it most,” said Mark Moorhouse, executive head of infrastructure finance at Sanlam Alternative Investments, a unit of the Sanlam group.
Founded in 2015, CFM currently has more than $2bn in assets under management, and is targeting an additional $4bn.
CI2 is the successor to the $1bn Climate Investor One (CI1) fund, which is focused on renewable energy infrastructure including solar, wind and hydroelectric projects across Africa, Asia and Latin America. As previously reported by Impact Investor, CFM earlier this year launched a third blended finance fund, CI3, which is targeting energy transition and green hydrogen investments.
Since its first close in 2021, CI2 has committed $339m to 25 climate adaptation and mitigation projects across Africa, Asia and Latin America. These include water supply and distribution projects in Vietnam and the Philippines, water desalination projects in Thailand and Kenya and the world’s largest debt-for-nature swap in Ecuador.
