Allied Climate Partners Launches to Catalyze Bankable Climate-Related Projects in Emerging Economies

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Dec 01, 2023, 08:45 ET

DUBAI, UAE, Dec. 1, 2023 /PRNewswire/ -- The new philanthropic investment organization Allied Climate Partners (ACP) launched today at COP28. Allied Climate Partners' mission is to increase the number of bankable, climate-related projects and businesses in emerging economies to create significant environmental, economic, and social impact.

"Local leaders around the world have identified a clear problem: there simply aren't enough bankable climate-related projects to deploy capital at the scale we need to address the climate crisis," said Allied Climate Partners CEO Ahmed Saeed. "We're launching ACP to fill a key financing gap at the early stages of project development, and partner directly with local investment professionals, entrepreneurs, and governments to support the creation of new sustainable infrastructure projects and businesses that will have lasting benefits to our climate and to local communities."

The lack of bankable projects has long stifled climate investment in developing nations, particularly in the precarious early stages of project development. While a mere 5 percent of project funding is needed for early-stage preparations, such as land acquisition and environmental assessments, securing this capital is challenging due to risk aversion among public and private funders.

In response, ACP is stepping in with a transformative solution. ACP was founded by leading philanthropies and investors, including Mark Gallogly, Co-Founder of Three Cairns Group. Gallogly spotted the opportunity to dramatically scale a new type of investment platform, which combines philanthropy, development finance institutions, and the private sector to address major gaps in the early, risk-oriented stages of developing climate-related projects and businesses.

ACP will select regional investment managers in emerging economies and support them with de-risking solutions so that they can more rapidly increase the number of climate-related projects and asset-oriented businesses in order to create significant environmental, economic, and social impact. This model is designed to address a critical financing gap at the early, risk-oriented stages of the development process.

"Our goal is to enable local climate-related projects and businesses to attract the capital needed to achieve their climate and development goals," said Gallogly, who serves as ACP's Chairman. "I'm thankful to the partners and leaders coming together to create ACP. We believe ACP can be a first step in capital being deployed at scale to catalyze climate solutions. Our objective is to provide a road map for government and private sector actors to deploy at even greater scale."

ACP initial funders include Arnold Ventures, Ballmer Group, Bezos Earth Fund, Anita and Josh Bekenstein, the Children's Investment Fund Foundation (CIFF), Sea Change Foundation International, the Soros Economic Development Fund (SEDF), Three Cairns Group, and several others.

"To solve the climate crisis, business as usual simply won't do. Local entrepreneurs have innovative ideas, yet too often don't have access to capital to make big ideas a reality. That's where Allied Climate Partners comes in," said Andrew Steer, President & CEO of the Bezos Earth Fund. "ACP will finance projects, generate returns, and then reinvest philanthropic proceeds, leading to a multiplying effect where markets can have an outsized impact for positive change. The Bezos Earth Fund is proud to serve as a founding partner for one of the most innovative climate finance solutions launched in recent years."

A crucial part of ACP's strategy is to enable philanthropic capital to encourage MDB and DFI participation in climate-related projects. ACP is proud to be working closely with a number of leading Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs), including the International Finance Corporation (IFC), a member of the World Bank Group, U.S. International Development Finance Corporation (DFC), British International Investment (BII), the UK's DFI and impact investor, the African Development Bank (AfDB), Proparco, a subsidiary of Agence Française de Développement Group, FMO, the Dutch Entrepreneurial Development Bank, and IDB Invest, a member of the Inter-American Development Bank Group, who will sign several MOUs throughout COP28 with the intention of providing senior capital to ACP's initiatives.

"Mobilising climate finance at scale in emerging markets requires a significant increase in the number of investable projects," said Noel Quinn, HSBC Group Chief Executive. "ACP can play a valuable role in aggregating blended finance, allowing for the derisking of projects and enabling capital to be channelled to where it can have the greatest impact."

ACP and its partners are initially looking to aggregate an $825 million investment platform, catalyzed by an anticipated $235 million in philanthropically-backed junior capital. ACP will fund the junior equity of initial investment managers in Southeast Asia, Africa, the Caribbean & Central America, and India. Senior equity in these initial investment managers is expected to be provided by the MDBs, DFIs, and private sector actors. ACP would anticipate that these managers will mobilize $11 billion upon full deployment for the construction of bankable, climate-related projects, generating a 47x capital mobilization multiplier on ACP's junior, risk-oriented philanthropic capital, and a 14x multiplier on the aggregate investment platform. By proving this model, ACP aims to induce commercially-oriented public and private sector investors to provide capital where they likely would not otherwise.

At COP28, ACP will also sign a strategic partnership agreement with the Monetary Authority of Singapore, Singapore-headquartered global investment company Temasek, and IFC to increase the number of bankable climate projects in Asia.

"Singapore looks forward to partnering ACP to unlock and finance green and sustainable infrastructure projects in Asia, and working together for a more climate resilient future," said Ravi Menon, Managing Director, Monetary Authority of Singapore.

"The Allied Climate Partners initiative is a strong example of how collaboration is critical to addressing climate change," said Mohamed Gouled, IFC's Vice President of Global Industries. "IFC is a global leader in climate finance in developing countries, and we look forward to leveraging our decades of experience in this area under the ACP initiative to scale further financing for climate-related projects."

The first fund that ACP will invest in is the Southeast Asia Clean Energy Fund II (SEACEF II), managed by Clime Capital. SEACEF, which established the initial proof of concept for ACP, has built an initial portfolio of ten investments in early-stage, climate-related projects and businesses and catalyzed significant follow-on funding from private sector investors. SEACEF II is expected to include senior equity from the private sector, DFIs, and MDBs, as well as catalytic junior equity from ACP and other parties.

"In response to the climate crisis, it is crucial for the development community to finance and deploy effective solutions as early as possible." said DFC CEO Scott Nathan. "DFC commends Allied Climate Partners for addressing this critical need for early-stage intervention. Doing so should help better position DFC and our partners to maximize impact across priority sectors such as energy, infrastructure, and food security. We look forward to exploring opportunities for collaboration and continuing our work to de-risk investments in the developing world."

"In USAID's work in emerging economies around the world, we see so many new projects and businesses poised to help their communities build resilience to the changing climate and transition to a green economy. But these entrepreneurs need funding partners who can support them through the earliest, riskiest phases as they refine their ideas and establish the proof of concept they need to draw in investors," said Samantha Power, Administrator, USAID. "We applaud Allied Climate Partner's vision to support these projects in that critical early stage, and we look forward to their success in driving private capital to scale climate solutions and advance sustainable, equitable, and resilient development."

About Allied Climate Partners:
Allied Climate Partners (ACP) is a philanthropic investment organization with a mission to accelerate the climate transition and improve livelihoods in emerging economies by increasing the flow of capital to bankable, climate-related projects and businesses. ACP selects regional investment managers in emerging economies and supports them with first-loss capital, expertise, and the mandate to address a critical financing gap at the early, risk-oriented stages of the development process for climate-related projects and asset-oriented businesses. Without this support, many projects and businesses struggle to attract the necessary capital to achieve their climate-related goals. By proving this model, ACP aims to induce commercially-oriented public and private sector investors to invest where they likely would not otherwise.

About Three Cairns Group:
Three Cairns Group is a mission-driven investment and philanthropic firm focused on the climate crisis, founded by Lise Strickler and Mark Gallogly. Three Cairns develops and supports cross-sector initiatives to accelerate the clean energy transition and drive transformative, equitable progress through three primary strategies: investments in innovating and scaling climate solutions; philanthropy supporting a pipeline of innovative leaders, projects, and organizations to catalyze equitable climate solutions; and incubation of projects to fill gaps at the intersection of climate, finance, and people and launch organizations that can drive climate action at scale.

No parties quoted above have received compensation for providing statements. This press release does not constitute an offer to sell or the solicitation of any offer to buy any securities or service. This press release contains forward looking statements which may or may not be realized and are contingent on uncertain events.

SOURCE Allied Climate Partners