• BII commits $40 million as cornerstone investor in $1 billion climate fund

• Allianz-led blended fund targets renewables, transport, agriculture in emerging markets

• Nearly 40% of investments earmarked for Africa

British International Investment (BII), the UK’s development finance institution, said on Tuesday, Jan. 20, 2026, that it would act as a cornerstone investor in a $1 billion blended finance fund aimed at supporting climate investment in emerging markets.

BII will invest $40 million in the Allianz Credit Emerging Markets (ACE) fund, managed by Allianz Global Investors, the two organisations said in a joint statement. The fund was launched on Monday in London and has already secured $690 million in commitments.

The fund is built on a blended finance structure combining public and private capital. Development finance institutions and multilateral lenders will provide around $150 million in concessional capital to take first-loss risk, while private investors are expected to contribute up to $850 million.

If it reaches its target size, the ACE fund would rank among the largest blended finance vehicles ever launched. It aims to finance projects in renewable energy, clean transport, agriculture and financial services across emerging economies.

The fund’s sponsors said nearly 40% of disbursements will be directed to Africa, a share they described as significantly higher than in comparable funds. The remainder will be allocated across other emerging regions.

Blended finance is drawing renewed interest as governments and donors seek to bridge a global climate finance gap estimated at several trillion dollars a year. Despite this momentum, the approach does not have unanimous support. OECD and World Bank evaluations have highlighted the complexity of such structures and their heavy reliance on concessional public funding. They have also noted that the volumes mobilised so far remain below what is needed.

Fiacre E. Kakpo