Allianz Global Investors has secured $690m for a new blended finance fund designed to channel private capital into climate-focused projects across emerging markets.

The Allianz Credit Emerging Markets fund is roughly 70% towards its $1bn target, AllianzGI said, with concessionary capital of $150m provided by British International Investment, Global Affairs Canada, and the Inter-American Development Bank Invest. The junior tranche is designed to absorb risk and stabilise returns for private investors.

Private capital commitments have come from Allianz SE and Swiss pension provider GastroSocial Pensionskasse. The structure aims to crowd in institutional investors that might otherwise be deterred by the risk-return profile of emerging-market climate investments.

“This strategy is a great example of the strength and power of collaboration between the public and private sector and the significant potential for further scale in this asset class,” said Edouard Jozan, head of private markets at AllianzGI.

The fund will invest in sectors aligned with the Paris climate agreement, including renewable energy, transportation, and financial services. About 40% of capital is earmarked for Africa, a higher proportion than in comparable vehicles.

The fundraising comes as development finance faces pressure from reduced aid budgets in several countries, reinforcing the importance of blended finance structures in mobilising private capital for climate and infrastructure assets.

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