Investing for Impact IMPACT = Using blended finance to increase private capital in emerging markets
May 20, 2025
Joan Larrea, CEO of Convergence and a leader in blended finance, discusses the urgent need for private capital in emerging markets as public development budgets shrink. She breaks down blended finance, emphasizing its potential to align commercial and concessional funds to drive sustainable development. The conversation covers the challenges of investing in the global south and strategies to de-risk these investments. Joan also reflects on the future of international development post-USAID, highlighting the necessity for innovative partnerships and approaches.
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Boost Efficiency to Scale Blended Finance
- To scale blended finance, improve efficient use of catalytic money and speed of deployment.
- Increase clarity from donors on priorities and standardize transaction designs to attract greater private capital.
Size Yields More Leverage
- Larger blended finance deals achieve higher leverage ratios, attracting more commercial capital per concessional dollar.
- It's not just catalytic capital shortage; deal structure and availability also impact investment scale.
Blended Finance Targets Viable Markets
- Blended finance usually targets lower middle-income countries due to better investment conditions.
- Large deals succeed via diversification and aggregation, reducing risk and attracting institutional investors.