Memorandum of Understanding to mobilise impact capital signed
British International Investment (BII) and Amsterdam-based ILX Management (ILX) have entered a contract in which they committed to jointly support developing economies and low income countries achieve sustainable development goals (SDGs).
BII is the UK’s (United Kingdom’s) Development Finance Institution (DFI) and impact investor whose core objective is to provide impact-focused investment that leads to positive economic, environmental and social outcomes. According to BII’s Annual Review 2022, the organisation recently dedicated 46% of its annual commitments, a staggering £591 million, to climate finance reiterating its role as a leading climate investor in Africa and Asia.
Towards these ends, BII has partnered with ILX Management to invest US$500 million in the aforementioned geographical locations.
“This MoU is a sign of our shared intent to co-finance up to US$500 million of debt transactions to Facilitate long-term sustainable development across developing economies and low-income countries in Africa, Asia, and the Caribbean.” read an official joint statement from BII and ILX Management
ILX Management B.V. is the Amsterdam-based manager of ILX Fund I, an SDG (Sustainable Development Goals) and climate-focused emerging market private debt fund that invests in loan participations originated and structured by Multilateral Development Banks and other Development Finance Institutions.
Through partnering with global institutional investors to make significant allocations to emerging markets, ILX aims to create large scale Investment opportunities in global development finance that directly contribute to sustainable development and climate finance objectives across the emerging markets and developing economies.
“ILX has already received over US$1 billion in Commitments from leading Dutch pension funds and is currently raising a successor fund for a targeted US$ 2 billion commitments from European pension funds. Working with BII, together we will increase financial capacity for project finance, financial services debt and private sector debt across Africa, Asia and the Caribbean. We have a strong track record of investing alongside the leading Multilateral Development Banks and other Development Finance Institutions in climate, and SDG-targeted projects across emerging economies globally and look forward to the opportunities this partnership will bring.” said Manfred Schepers, CEO, ILX Management B.V.
Shedding light on mutual expectations, both parties in an official statement asserted this new partnership will enable both parties to leverage each other’s expertise and provide additional financial firepower across Africa, Asia and the Caribbean.
In a September 2023 United Nations (UN) report titled “Scaling blended finance to mobilize private SDG investments in LDCs and other vulnerable countries” which is a product of the “SDG Action Weekend – Side Event” held during the SDG Summit 2023, the UN encouraged such investments defining blended finance as “the strategic use of development finance for the mobilization of commercial finance towards sustainable development in developing countries.”
This new partnership is therefore seemingly in line with the United Nations’ (UN) recommendation for private finance to achieve SDGs.
“It holds the potential to unlock significant private sector finance necessary to fill the SDG finance gap,” read the report in part
ILX and BII will share information on prospective projects, emerging technologies, and financial innovation. They also intend to establish a roadmap to mobilise private sector capital, specifically focusing on providing institutional investors with greater access to high-impact private debt investment opportunities in scalable businesses driving productive, sustainable and inclusive growth.
“This partnership has been driven by our shared view of the need to invest to meet the SDGs. It furthers our ambition to create new job opportunities in developing economies and will provide private credit to help bridge the finance gap faced by many businesses. This asset class remains nascent, comprising of just 3 per cent of private credit globally, and is the natural next step for allocators of global private credit.” said Nick O’Donohoe, CEO, BII
BII’s investment in emerging economies is currently supporting over 1,500 businesses, with climate friendly sectors such as renewable energy, electric mobility, and sustainable agriculture being the biggest beneficiaries of the much appreciated impact capital.
Coming a short while after the inaugural Africa Climate Summit which saw various western nations and Non-Governmental Organisations pledge millions of dollars to help Africa play a significant lead role in adapting to and tackling climate change, this MOU is a significant step in climate action.
“This MoU with ILX is an example of British International Investment’s pioneering approach to mobilising the private finance needed to deliver the UN Sustainable Development Goals. I am proud that FCDO provided early-stage funding to ILX, which Went on to secure over US$1 billion in commitments to its first investment fund. This new partnership will mobilise up to US$500m of additional finance for low-income countries across Africa, Asia, and the Caribbean, improving access to renewable energy and quality infrastructure and helping businesses to thrive.” stated Andrew Mitchell, UK Minister for Development and Africa
Countries in the targeted areas are eager to achieve a higher economic ranking as their populations hold on to hopes of living better quality lives, therefore, BII’s and ILX Management’s move to invest across a broad range of sectors including renewable energy, infrastructure, financial services, manufacturing and agribusiness to increase the flow of capital into impactful businesses and projects which may better livelihoods in Africa, Asia, the Caribbean and beyond, is a pleasant ray of sunshine for stakeholders and well-wishers.
