IFC and Canada’s Convergence combine on $500m impact investing platform

IFC, the private sector arm of the World Bank Group, is working with Canadian government blended finance body Convergence to design a $500m platform seeking to leverage private investment in health and education businesses in developing countries.

Speaking to RI, Joan Larrea, CEO of Convergence, said the move was part of the IFC’s desire to bring more money to the table, instead of just deploying its own money in projects that fit its risk profile.

“They ended up with the same kind of thinking we have at Convergence,” she said. “Which is to organise IFC money and grant money into layers that can underpin other people’s money so they are going to end up with various products that others can invest in, hopefully including institutional capital.”

Larrea said the design of the platform was in very early stages and that a consultant is being sought to support the process which will include seeing what type of investors would be interested in the platform, what sort of products they want and their risk tolerance.

The partnership with the IFC is part of Convergence’s grant programme which will see it award more than C$10m in grants over the next five years to develop blended finance models. It has already awarded seven grants including one to develop blue bonds for conservation activities in Small Island Developing States and employment integration programs for Syrian refugees through development impact bonds.Larrea said: “The IFC grant is different from other grants which we’ve given to smaller parties. This is Convergence trying to help a very large institution. It’s like working with a ship on the ocean and trying to get it to change direction. Speaking as an alumnus, I am very proud of it.”

Larrea spent 10 years at the IFC, worked at the Overseas Private Investment Corporation (OPIC) prior to joining Convergence, which is funded by the Government of Canada, Citi Foundation and the Ford Foundation.

Speaking about the partnership, Elena Sterlin, IFC Global Manager for Health and Education, said: “This innovative finance platform will enable us and other investors to support riskier projects with potential for expanding access to quality, affordable health and education services for all income groups, especially underserved people living in the poorest countries.”

The new investment platform will target health and education businesses serving the ‘base of the pyramid’ – the 4.5 billion poorest people who live on less than $8 per day that have a clear pathway for scalability and financial sustainability.

Convergence is chaired by Walt Macnee, Vice Chairman, MasterCard Worldwide.