Simplified Structures for Blended Finance Funds Can Support the Mobilization of Billions of Dollars to Emerging Markets, per British International Investment and BCG
LONDON—British International Investment (BII) and Boston Consulting Group (BCG) today published a new report that provides a toolkit to significantly scale investor appetite for blended finance funds.
Blended finance has long been seen as a key route to deploy concessionary forms of capital—often managed by development finance institutions, multilateral development banks, and others—to attract private investors to emerging and frontier economies that are starved for commercial investment.
These deals blend public, philanthropic, and private capital into a single investment structure, with each playing a distinct role and bearing different levels of risk and return. When well-designed, these structures enable private investors to access opportunities that would otherwise fall outside of their risk-return thresholds—unlocking new markets, diversifying portfolios, and generating measurable impact.
But these types of products have been widely seen by private investors as being too complex and expensive to design or back. These structures have only attracted a total of $15 billion per year from global investors to date.
BCG and BII announced today that they had developed two practical tools for designing and assessing blended finance funds that could unlock billions of dollars of private capital that is urgently needed to support the UN’s sustainable development goals (SDGs) and meet the challenge of the climate emergency.
The paper, entitled Scaling blended finance: Practical tools for blended finance fund design , provides a typology and a scorecard for blended finance funds. BII and BCG assessed 65 blended finance funds and found that over 90% could be classified into just five archetypes. These archetypes are differentiated from each other by fund purpose, institutional investor risk appetite, and underlying asset risk. While not rigid structuring templates, they provide a practical reference for fund managers and investors to design, assess, and capitalize blended vehicles more efficiently.
Leslie Maasdorp, Chief Executive of British International Investment, said, “Our report identifies how a blended finance fund can be a made-to-measure proposition, rather than a bespoke proposition that understandably is off-putting to all but the most devoted impact investors. We hope that it illustrates how blended finance can be a key driver for mobilizing private capital into those countries that need it the most.”
Rich Hutchinson, Managing Director & Senior Partner, and Global Head of Social Impact at BCG, said, “Scaling blended finance isn’t just a technical challenge—it’s a systems challenge. These tools bring structure to that complexity and offer fund managers and investors a shared language to accelerate progress. We hope this contribution helps lower the barrier to entry for private investors and strengthens the pipeline of high-integrity capital into the places and sectors that need it most.”
The report also includes a scorecard to assess the quality of a blended finance structure in a systematic and consistent way. It serves as a tool for both commercial and concessional investors to determine whether a fund’s structure aligns with their objectives, balances stakeholder priorities, and adheres to best practices. While commercial and impact assessments are well-established, this scorecard fills an important gap by providing a structured approach to evaluating blended finance fund structures alongside existing due diligence frameworks.
Asset managers can use the five archetypes in the paper as reference points for fund design. Where a fund does not fully correspond to one of these archetypes, the typology can help identify and justify the differences. The scorecard can help ensure the fund design aligns with investor expectations. These tools provide fund managers with an independently generated rubric to articulate trade-offs and provide clarity around the implications of incorporating divergent investor objectives.
For more information please contact:
BII: Andrew Murray-Watson, Head of UK Media -
amurray-watson@bii.co.uk
BCG: Eric Gregoire, Global Media Relations Director –
gregoire.eric@bcg.com
About BII
British International Investment is the UK’s development finance institution and impact investor. As a trusted investment partner to businesses in Africa, Asia and the Caribbean, BII invests to create productive, sustainable and inclusive economies in our markets. Between 2022-2026, at least 30 per cent of BII’s total new commitments by value will be in climate finance. BII is also a founding member of the 2X Challenge which has raised over $33.6 billion to empower women’s economic development. The company has investments in over 1,580 businesses across 65 countries and total net assets of £8.5 billion. For more information, visit: www.bii.co.uk | watch here . Follow British International Investment on LinkedIn and X.