Blended finance

Why it matters

Blended finance is a way to open new markets and mobilise capital that bridge funding gaps and accelerate green, just and inclusive development.

Blended finance combines concessional finance from donors or third parties alongside development finance institution’s (DFIs) normal own-account finance and/or commercial finance from other investors to develop private sector markets, address the SDGs, and mobilise private resources.

Simply put, blended finance brings together different types of capital to de-risk investments, mobilise private finance, develop markets and strengthen development impact and commercial viability.

By doing so, blended finance minimises funding gaps in underserved regions by mobilising capital to underserved and frontier markets where market failures and risk perceptions often keep purely commercial investors away.

Dual focus

Reaching new markets and mobilising high-impact investments

At Impact Fund Denmark, we think of blended finance in two complementary ways: We use concessional capital from development partners to reach underserved and frontier markets or sectors not traditionally targeted by the fund, and we blend our own commercial capital with institutional and private capital to mobilise larger-scale investments in emerging markets.

We ensure that public capital is used strategically and efficiently to:

Unlock private investment
Address market failures
Create long-term, sustainable development.

We combine different types of funding from concessional support from the Danish government and the European Commision to commercial capital from Impact Fund Denmark or private investors to unlock investments in markets and sectors that are often overlooked by purely commercial investors.

Partners

European Commission

Provides guarantees, first-loss capital and funding for technical assistance that enable Impact Fund Denmark to develop blended finance solutions and scale investments.

Ministry of Foreign Affairs of Denmark

Provides concessional capital that enables us to deploy our capital into frontier and underserved markets, in line with Denmark’s development cooperation and climate objectives.

Danish pension funds

Provide long-term capital that enables Impact Fund Denmark to mobilise private investment and scale commercial investments in growth markets.

EDFI Management Company

Facilitates the European Commission’s guarantees, enabling us to deploy capital in line with our impact priorities.

Creating markets and scaling impact

Founded in 2010 by the Danish Ministry of Foreign Affairs, aBi Finance supports agribusinesses in Uganda through guarantees and loans. Impact Fund Denmark later assumed ownership, strengthening the commercial model and scaling access to finance to more than two million smallholder farmers.

Case

aBi Finance

aBi Finance provides loans and guarantees to financial institutions operating within the agricultural sector in Uganda, enabling them to support smallholder farmers.

SDGS