British International Investment (BII), the UK’s impact investor and development finance institution, has announced that it will act as an anchor investor for the Allianz Credit Emerging Markets fund (ACE), a large-scale blended finance vehicle aimed at boosting investment in emerging economies, particularly in climate-related sectors.
The blended finance fund was recently launched at BII’s offices in London and brings together a mix of public and private institutions. It is structured to use public and concessionary capital to reduce risks for private investors, making it easier to mobilise large amounts of long-term funding for development and climate projects in lower-income markets.
Under the structure of the fund, development finance institutions such as British International Investment and multilateral development banks will provide a combined $150 million in concessionary capital for the junior tranche. This junior capital is designed to absorb first losses, significantly reducing volatility and helping to support the return expectations of private investors participating in the senior tranche.
Private investors are expected to provide up to an additional $850 million, subject to the fund reaching its final close target of $1 billion. BII itself will contribute $40 million of the $150 million junior tranche capital. Other public sector partners joining the junior tranche include Global Affairs Canada, the Inter-American Development Bank Invest (IDB Invest), the Swedish International Development Cooperation Agency and Impact Fund Denmark (IFDK).
The announcement represents the first close of the ACE fund, which has already secured $690 million in commitments. For the senior tranche, anchor investors include Allianz SE and GastroSocial Pensionskasse, highlighting strong interest from institutional investors seeking both financial returns and measurable impact.
Once fully raised, ACE is expected to become one of the largest blended finance funds ever launched. Its scale signals a renewed appetite for investment structures that bring together investors with different risk, return and impact expectations, at a time when financing needs for climate action in emerging markets continue to grow rapidly.
Commenting on the announcement, Baroness Chapman, UK Minister for International Development and Africa, said BII’s participation demonstrates how the UK is modernising its approach to international development by working as both a partner and an investor. She said UK government support is being used to attract significantly more private investment, ensuring that every pound invested generates much more funding for countries in the Global South to address the climate emergency. According to her, this approach also benefits Britain by boosting growth, attracting investment, delivering returns for taxpayers and positioning the UK as a key hub for supporting emerging economies.
Leslie Maasdorp, Chief Executive of BII, said the institution recognises the need to use scarce concessionary capital strategically to unlock vast pools of private finance. He noted that such mobilisation is essential to meeting the global challenge of climate change and driving sustainable, impact-led growth in some of the world’s least developed countries, describing the ACE investment as another milestone toward that objective.
BII’s commitment to the ACE fund is the third investment announced through its £100 million mobilisation facility, which was launched in 2024 by Keir Starmer. Earlier investments under the facility include an anchor role in the Pentagreen Green Investment Partnership to support sustainable infrastructure in Southeast Asia, and a partnership with BlueOrchard to unlock life insurance capital for climate finance through a blended finance structure.
Edouard Jozan, Head of Private Markets at Allianz Global Investors, said addressing climate change cannot focus only on developed markets. He described the launch of ACE as a bold step in mobilising institutional capital for global development priorities, adding that collaboration between public and private sectors offers strong potential for further scale while delivering attractive returns and measurable positive outcomes.
Around 40 per cent of ACE fund disbursements are expected to go to Africa, a notably higher share than comparable funds. The remaining investments will be spread across other emerging economies, covering sectors such as renewable power, clean transportation, agriculture and financial services.
