This is a summary of a paper written by Maria Teresa Zappia and Nadina Stodie, published by BlueOrchard, 2018, 30 pages, available at: http://www.blueorchard.com/wp-content/uploads/181016_BlueOrchard_Blended_Finance-2.0.pdf
This paper focuses on research conducted by BlueOrchard, a Switzerland-based impact-investing firm, regarding how the public and private sectors can use “blended finance” to partner on achieving the UN’s Sustainable Development Goals (SDGs). Although work on the SDGs is dominated by the public sector, the authors argue for increasing private-sector involvement. In support of this idea, BlueOrchard has developed a plan called “Blended Finance 2.0,” which is intended to “give [a] voice to the private sector and ensure that commercial investors take the lead in structuring, sponsoring, and seeding blended finance funds together with public investors and DFIs [development financial institutions].” The firm’s strategies include simplifying blended-finance structures, engaging more retail investors, increasing transparency, adjusting incentive structures and altering risk-return expectations.
In support of the plan, the authors surveyed public and private investors ranging from DFIs to banks to family offices. Thirty-seven percent of the respondents had been involved in blended finance previously. The other participants were asked which sectors they would find most attractive. Sixty-three percent cited financial inclusion, 58 percent expressed interest in sustainable infrastructure, and 42 percent cited climate finance. Two thirds favor debt investment over equity investment or a mixture of the two. Regarding time horizon, 63 percent preferred a range of 3 to 7 years.
By Michelle Fleming, Research Associate
Sources and Additional Resources
BlueOrchard’s “Blended Finance 2.0”
http://www.blueorchard.com/wp-content/uploads/181016_BlueOrchard_Blended_Finance-2.0.pdf
BlueOrchard homepage
http://www.blueorchard.com/
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