New $280m IFC fund set up to boost private equity climate investment

Backing from UK, Canada and Azerbaijan SWF

A new fund has been set up by the World Bank’s private sector finance arm the International Finance Corporation (IFC) to help catalyse climate change investment by private equity funds.

The IFC Catalyst Fund has been backed with $280m (€208.4m) of investment from the IFC itself, the Canadian and UK governments and the $14.9bn State Oil Fund of Azerbaijan (SOFAZ).

The new fund will invest in funds that “provide growth capital to companies developing innovative ways to address climate change, and invest directly in those companies”.

The IFC, which is investing $75m in the fund, says it will provide “exposure to a diversified portfolio of private equity funds managed by established and emerging fund managers”. It would also offer investors the ability to “invest at scale” in fast-growing resource-efficiency sectors in emerging markets.

“Addressing climate change is a strategic priority for IFC, and private equity is well suited to jumpstart climate-friendly investment in emerging markets,” said IFC Chief Executive Jin-Yong Cai.“The Catalyst Fund represents a concrete step forward in mobilizing commercial finance for climate.

“It will encourage additional private sector investment into climate projects in emerging markets.”

In the 2012 fiscal year, the IFC invested more than $1.6 billion in climate-related projects.

“A concrete step forward in mobilizing commercial finance for climate”

The IFC already has a portfolio of $3bn in more than 180 private equity funds—including about $340m in 17 climate-focused private equity funds. All funds in which it invests meet its environmental and social standards.

SOFAZ’s assets are managed by five managers: the World Bank, DB Advisors, Credit Suisse, UBS and State Street Global Advisors. Last week the Baku-based investor tendered Extractive Industries Transparency Initiative (EITI) reporting services.